How to Save For a House: the Do’s and Don’ts For Saving For a Deposit
If you want to buy a house, you’re probably thinking “Oh no, I need to save thousands and thousands and thousands of dollars.” Don’t worry, though; it’s possible! I say this as a current homeowner, sitting in my house, drinking coffee – you can do these things too.
I’m going to break down exactly how by going over some really helpful do’s and don’ts to help you save for a deposit on your house.
How To Save for a House?
Buying a house is exciting. For many of us, it’s this massive white whale of financial stability. It’s not for everyone! You don’t need to buy a house to be a financially stable human being.
If you do want to buy a house though, it can be an excellent investment as well as an exciting big step. Like most big steps, of course, it will cost a lot of money. So, let’s dive into the different tactics that help make a difference when saving for a house.
How To Save For A House Deposit
Do: Understand Your Current Spending & Saving
Step one is to understand how much you are currently spending and saving. So, if you’re starting from square one right now and you have zero dollars saved for a house – that’s fine! You’ve got to start somewhere.
If you’re starting, look at your current budget and track your spending for a few months if you’re not sure where your money is going. Look at how much you’re saving, what you’re saving for, and how much you’re spending.
Anything you’re either saving money for or spending money on isn’t as valuable to you as your goal to buy a house. So, you can reallocate that money over to your house savings, giving you a bit of a savings boost.
Don’t: Give Up All Your Other Goals to Buy a House
Here’s a key ‘don’t’ to remember though – don’t give up essential savings goals to buy a house. So, I’m really talking about two key things here:
Do not stop saving for retirement. It’s a critical mistake not to make because your house is not a retirement plan. Your home is a place where you live and maybe work, and you’re still going to need food and other things in retirement.
Do not give up your emergency fund. It’s so important to keep contributing to an emergency fund because s**t goes wrong all the time with houses. Your house will fail, and if there’s no landlord to call so, you’re on the hook for those failures. If shingles fly off your roof, it’s on you to fix it! And don’t forget about saving for those hefty relocation costs!
Ultimately, if you give up these savings goals chances are you’ll probably end up dipping into your deposit fund anyway to cover these costs. So, don’t stop saving for these two critical things. Future you will be very happy if you have money in both these accounts!
Tips For Saving For a House
Do: Prioritise Your Savings Goals
That said, a key ‘do’ when you’re saving for a deposit is to prioritise your savings goals. So, yes, you can’t stop saving for your retirement or emergency fund. But, if you had been all-out sprinting to get your emergency fund fully funded, topped up, or anything like that – it is okay scale it down a little bit.
The same thing goes for saving for a vacation or saving for a beautiful new couch. Maybe, it’s more important to you to put that money towards your house deposit now and save for those things once you’re happily in your house.
I’m not saying you have to change your savings goals. However, if you’re trying to find ways to save for a home deposit, it’s worth looking at your optional savings for fun stuff. Perhaps you can better allocate that money to your house, depending on your timeline and your priorities.
Don’t: Think Your Income is Fixed
One more ‘don’t’ that you should avoid is thinking that you can’t make more money. I know that there’s a lot of reasons why some people don’t side hustle. But, if you can make even an extra $100 a month, that $100 could be very well used to help top up your deposit savings.
A side hustle can also be anything that works for you. You could try babysitting, write online, or take on freelance gigs in your skillset. There are all of these different ways you can make money. So, if you’re open to them, it could be a perfect way to accelerate your savings.
Do: Plan for Any Extra Income Ahead of Time
Even if side hustling isn’t your jam, it’s crucial to have a plan for what you’re going to do when extra money comes your way. Extra money can be anything from a tax refund, to a bonus at work, to even birthday money! There are all of these different times when money comes into our lives as a surprise.
So, if you have a plan for what you’re going to do with it when it does, you’ll be so much better prepared to handle it the way you want to handle it. As opposed to being like, “Oh well, I’m just going to treat myself with my tax refund.” No! You could put that money into your deposit savings and be done with it. It’s an easy decision then because you’ve planned for it already. Plus, those little bits of extra money will add up over time.
Why It’s Worth All the Effort
The best part of all this is once you’ve hit your goal, you have the learning experience of saving for something big and reaching your end target!
Knowing how to balance priorities, save up a lot of money and make a plan is something that’s going to be helpful at any point in your life, even after you’ve saved for a house. Because let’s be real – you’re probably going to want to redo your kitchen!
Jacaranda Finance is an online lender that gives everyday Aussies a fair go at personal loans. If you need a financial boost, click here to find out more. For more finance tips on saving and setting goals, check out our blog!
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