Goals of Buying your Own Home? Follow these tips to get on track.
Saving for a house deposit can feel out of reach but it can become a reality with the right approach and a well thought-out strategy. Here are four saving tips to help you get on the right track.
1. Analyse Current Spending
Take a look at your current financial situation and access you outgoings versus your incomings. It may require restraining from the extra spending throughout the week; perhaps eating more at home or sticking to that ‘one coffee a day’ limit.
2. Budgeting & Saving
The trick to any good saving plan starts with a detailed budget. Record all the expenses you normally pay and monitor it weekly. Try setting the goal at the top of the budget as a constant reminder to stay on track. A budgeting technique that has proven to be effective for many people is the “50/30/20 rule” created by Harvard bankruptcy expert Elizabeth Warren. How does it work? The goal is to break down your weekly income (after tax) and divide it between three categories.
1. 50% of your weekly after tax income on essential needs.
These include groceries, housing, utilities, transportation etc.
2. 30% on wants. These include unlimited messaging plan, eating out, takeaway coffee etc.
3. 20% for emergency funds, savings and debt repayments.
There are many budgeting techniques out there to research. Find and adapt one that works for you and your current situation.
3. Manage existing debts
Without paying off current debts, it’ll be difficult to effectively save. Therefore, consolidate your current debts, including loans and credit card expenses and work at paying them off. If the 50/30/20 rule works for you, then ideally 20% of your weekly income would contribute to paying off debts.
Take the time to research grants that may apply to you. Is it your first home? Look into the First Home Owner Grant.
With a structured saving plan and commitment, that dream home doesn’t seem too far out of reach.
* For further guidance relating to your unique circumstances, we recommend seeking professional financial advice.