Whether you’re twenty, twenty-five or approaching your mid-thirties, for many, home ownership just doesn’t seem so attainable as it did for our parents and grandparents. Property prices might seem to be out of step with salary and wage realities.
While elements of this belief are a bit of a myth – our parents grew up in times of 17 per cent mortgage interest rates and didn’t have the option of a no-deposit home loan, the good news is, Green Street Property has consolidated some straight-forward budgeting hacks that can help anyone committed to home-ownership to scrap together the dollars to put down on their new home. Here are five simple starters to rocket your savings.
Set up the right savings depository. Boring, right? Well, not if you choose wisely…
The reality is that high-interest savings accounts are generally another myth from yesteryear that young home-buyers of today should put to rest. There may be one or two ok ones around, but most times they require large first-time deposits – of several thousand dollars – to get started, and the term for earning game-changing interest is too distant to be able to stay motivated to visualise the dream.
The best bet is to set-up a moderate interest-yield account that rewards keeping your money where it is, usually on a monthly or bi-annual basis. This reward is as flexible as your goal: if you want to fast-track your savings pathway, keep your money locked away and add to it regularly until the moment comes to purchase your dream-for-now home (however quaint, simple or fixer-upper) and you can pull your money out then and there, having received previous rewards for your efforts. No fixed terms, just incentives. We recommend speaking to your finance crew about the best banking solution for you here.
Smash the café breakfasts with your mates; just keep it in check.
Practically everyone enjoys a meal during the week, so be realistic with your savings goals. Outright refusing to meet your friends for brekkie on a Sunday for a year won’t make you feel all that great about your life balance. You also don’t want to be the schmuck (that’s right, we said schmuck) that bowls up and sips a black coffee smugly among your dining friends every time. Just factor it all into the budget and see where you land with a realistic frequency for treating yourself.
There are plenty of ways to make up for a $20-50 meal with friends each week, and we have some great ideas that follow. You’re kidding yourself, though, if you want to dine out continually throughout every week, and expect to see dollars to save in your budget. Enjoy, don’t destroy. That boring old saying “everything. In moderation.” Yep, yawn it up. Oh. One thing…Give up buying coffees every day. Just stop that.
Fundraise with what you’re good at and what you love.
Yes, this means adding a little more to your weekly workload, but consider taking on a bit of a side-hustle to gather up some extra cash. The upside is, unless you’re ridiculously lucky to be able to work precisely in the career that really meets all of your interests and dreams, chances are, there is some skill or hobby that you have where you could capitalise and make a bit more cash for saving toward your property investment.
Maybe you’re a creative arts-type and can explore freelancing? Putting in the leg work to find a client or two could be the difference of between $50-200+ each week to squirrel away. That’s going to make a huge difference to your savings balance over the course of a year. Airtasker and other online job posting platforms might be a good place to start yielding some cash for your ingenuity.
Not a creative? Mow a lawn, walk a dog, babysit, drive an Uber, be someone’s handy person, offer to clean your parents’ house once a fortnight. They’re getting old! And they don’t want you to move back in to save, so have the conversation. It’ll likely go something like this:
“Family, I/we have decided it’s time to start saving for a home.”
(Here is where one parent will make a silent exit and head straight to the garage/TV room to avoid this conversation continuing in their ears, but persevere with good old remaining Soft Parent)
“I don’t want to think about imposing on you – having additional adults in the house may be too costly and consuming for you.
“What we need is cash and so I’m setting up my own cleaning business to raise some.” (Leave out the bit about your target clientele being a single audience)
“How do you feel about my taking the pressure of cleaning this huge house off your shoulders and do it for you?”
“My rate is $25 an hour. I reckon this place would take me three hours. Alternatively, we could save about $200/week by moving into the home office for a year. What do you think?”
All this may take a bit of Netflix binge time away from you in the short-term…..but….
Sell, sell, sell.
Give up a bit of what you don’t really need now and then video yourself in the future…walking through your new front door. That’ll be a great rewatchable.
Can you downsize your car, or get rid of it altogether? Is biking through life an option for your new normal as a Future Home Owner?
New gen trash and treasure initiatives are cropping up in popularity all the time. Raid My Wardrobe, Hunt and Gather, local car boot sales – they’re back, baby, and they’re primed to make you a buck. You have Instagram and facebook so use your channels to pop a few things on social marketplaces and rid yourself of too much to gain some considerable cash.
Can you motivate yourself to put your exercise membership or streaming service on hold for three, six, twelve months and divert that cash to your deposit fund? Learn about the land of DVDs, free-to-air TV and YouTube exercise subscriptions for a short time to boost your savings. Exercising in your pyjamas is quite empowering. We recommend staying on your fit and healthy course, but think outside the square about how you get your fit hit for a little bit to realise the bigger picture.
In the end, what you lose in the short-term “go without” you’ll save on a smaller removalist truck once your new home has settled and ready for you to move in.
Live in the moment, but keep an eye on the future.
There is minimal risk in buying a property that is one or two steps down from your forever home. As long as you can sustain the payments at the time of buying and have gamed your budget if interest rates go up a few per cent, you need to keep your dreams sustainable for the now. Just enter the market with whatever you can. Keep up the consistency of solid repayments and it won’t be long before you can legit go to your agent and ask them to keep you in mind for your next investment.
We love building property wealth for our clients and if you know you’re looking, it’s our business, literally, to help you achieve that next step.
So, buy what you can afford – a home that will enable the dining out lifestyle, some time with friends, renewing membership to your favourite gym membership. Your forever home is a really big decision and worth keeping a future eye on.