Saving for your first-home deposit

Saving $10,000 to $30,000 or more for a deposit on your first home can seem like an overwhelming task when you’re just starting out. How can you do it when it seems like your finances are already stretched? Thousands of others have done it before you and you can do it, too.

Getting started

The first thing you need is a goal. Go to several lenders and find out what your home loan options are and how much deposit you will need. What government incentives are available to you? Explore all your options and come up with a plan.

Make a commitment

Once you know how much money you need to save, make a commitment to saving it. A good way to do this is to open a savings account at a different bank than the one you normally use. Then take a look at your income, deduct 10% and find ways to put that money into the account. Transferring money to a high-interest savings account that is separate from your everyday account makes it a little bit harder to access that money easily, meaning you won’t be as tempted to take it back out again.

Make a list

If you take the time to write a list of all your small monthly expenses, you will probably be amazed by how much money you can save. For example, write down how much:

• you spend on lunch at restaurants every month
• takeaway coffees cost per month
• you spend at the pub
• transportation costs each month
• you spend on entertainment, both at home and outside.

Added together, small expenses like these add up to hundreds of dollars per month. Simply taking lunch to work with you every day instead of eating out can save you around $300 a month. Takeaway coffees can cost up to $200. Take your own in a thermos or make do with instant and you can save $100 or more.

Those drinks you indulge in once or twice a week at the pub can add up to well over another $100 a month. If you have a few beers with your mates every day after work, you could be spending as much as $500 a month on beer alone.

If you have a credit card or two, you’re throwing money away on interest every month. Use the money you save on eliminating the little things to pay off your credit cards. As a bonus, not having credit card expenses can boost your borrowing capacity when the time comes to secure your home loan.

Thanks to technology there is no excuse to be lax about tracking your expenses. Apps like Pocketbook make tracking your spending habits really easy.

Paying off your credit cards and eliminating unnecessary expenses can potentially save you more than 10% of your monthly income. Commit to the 10% and add a little extra when you can. Don’t touch your savings account for a year and you will be amazed by how much closer to your goal you are.