Ten Budgeting Tricks to Boost Your Deposit Savings
by Carlisle Homes
Saving for a home is no easy task, but with the right information and a plan in place, you can get there! Here’s ten tips and tricks to boost your deposit savings.
With house prices on the rise again, first home buyers have no time to lose. The sooner you have a deposit saved, the sooner you can get a foot on the property ladder and be on your way.
But as we all know, it’s easier said than done. You need at least 5% of the total purchase price, plus your purchasing costs. Learn more about deposits here.
If you want to avoid lenders mortgage insurance (LMI), you’ll need 20%. If that’s too high for you to manage, you’re certainly not alone. Bear in mind, though, that the more you can save the better. Even 10% is preferable to 5%, as it will:
- Demonstrate to the lender that you’re capable of saving and are therefore a responsible borrower
- Lower the amount of LMI you need to take out
- Increase your loan-to-value ratio (LVR) and help you build equity faster.
So how do you do it? Try these ten tricks to turbocharge your deposit savings.
1. Make a budget
Understanding your spending habits is key to identifying ways to save. The first step is to make a budget that accurately reflects your outgoings.
Make sure you list all your expenses, even the ‘little things’ like streaming TV services or the weekly beers with your workmates. Go through your last few bank statements (six months is ideal) for an eye opening look at what you really spend.
2. Track your spending
Once you’ve made a budget, you can identify:
- Where to cut back; and
- How much you can afford to save
But will you stick to it? The second part of an effective budget is tracking. Make it a habit to record everything you spend - no more wondering where the money goes! You can use plain old pen and paper or there are several free online apps to help:
Pocketbook is a free Australian budgeting app where you can link bank accounts to track transactions and sort into categories, set budgets for each category and get notifications when you’re close to a limit or a bill is due. Available for iOS and Android
Canstar’s app also allows you to link bank accounts and categorise spending. It also offers finance tips, like how to get a better mortgage rate, to help you along the way. Available for iOS and Android.
If you prefer an ‘envelope’ system, try You Need A Budget, known as YNAB. It works by encouraging you to allocate every dollar before it’s spent, with helpful tips, videos and forums to boost your budgeting. YNAB is available on iOS, Android, Alexa and even your smartwatch!
3. Automate your savings
Once you’ve decided how much you can afford to save, set up a direct debit for that amount. Schedule it for pay day (or the day after) so that your savings come out of your main account almost as soon as the money comes in.
4. Open a dedicated savings account
In today’s low interest environment, let’s face it: even a ‘high interest’ account will give you minimal returns. However, it’s still worth searching for the right savings account. By setting up a separate account, you can keep your deposit savings out of sight and out of mind. Choose one without a debit card so it’s harder to dip into it.
5. Put bonuses and windfalls towards the deposit
Got an end-of-quarter bonus or a windfall you weren’t expecting? Put it straight into your deposit fund. If you weren’t expecting that money, you weren’t relying on it. Unless it’s really needed to cover an emergency or pay down debt, it’s safest in your savings account.
6. Don’t let lifestyle creep swallow your pay rise
On a similar note, consider putting any pay rises towards your deposit. If you were living comfortably on your previous salary, just set up a direct debit for the extra amount and send it to savings. You can’t miss money you never had!
7. Declutter and sell
Give your account a bit of a boost by selling off any unwanted items. Whether it’s designer clothes you’ve never actually worn, equipment from a long ago hobby or that motorbike you no longer ride, everyone has something to sell. Go through your possessions, list the extras on eBay and enjoy the extra space!
8. Make simple swaps
You don’t have to give up everything you love in order to afford a home. But if you’re really serious about saving, you can try some simple swaps. Look at your budget to identify ‘luxury’ spends and see if you can bring them down.
Maybe that’s a nice oven pizza on a Friday night instead of going out to the local wood oven pizza place. Or leave for work ten minutes earlier so you can catch the bus instead of driving and save the parking fee. Bring lunch from home and pocket the money you’d spend on a cafe meal. Little things add up!
9. Implement a ‘no spend month’
Challenge yourself to go a month without buying anything unnecessary. Wear the clothes you have, read the books already on the pile, use up existing art supplies and wait a while before you grab that shiny new gadget. You might be surprised at how much you can save!
10. Get a side hustle
Most savings tips are aimed at spending less money. If that won’t get you over the line, it’s time to look at the other side of the equation. That is, increasing your income.
Depending on your circumstances, you might be able to increase your hours at work or put your hand up for overtime. Others might consider a second part time job, or monetising an existing hobby. And remember: the money from the extra gig goes straight to the deposit!
Saving for your first home is a huge task, and it’s not always easy. But keep your eyes on the prize — owning that brand new home that’s just for you — and you’ll see the sacrifice is worth it. Learn more about how much your new home will really cost here.
Get in touch with Carlisle Homes’ in-house construction finance specialists to find out how far your budget will go. Or find out more about our fixed price house and land package for all home buyers. There are no hidden costs, so you can develop your budget with confidence.
Decided now is the time to turn your dream of an incredible family home into a reality? First step – pay a visit to a few of our 77-plus stunning display homes, situated right across Melbourne, and find the perfect design to fit your budget, lifestyle and aesthetic.