Breaking into the property market without much of a deposit is still achievable for first time buyers but those who chip a decent sum into their property upfront are going to be much better off. While it is possible to purchase a home with less than a 20 per cent deposit, without at least five per cent you’re really going to struggle to get a loan. Furthermore, lenders are now looking for proof that borrowers have an ability and willingness to save. And with a bigger deposit guaranteed to save you thousands of dollars in interest down the track, it makes sense to get saving now.
But saving is no easy task. Here are some strategies to help you get your savings on track – and stay on track.
Identify your destination – Without a savings goal your savings plan is bound to be forgotten within weeks. Sit down and determine exactly what size deposit you want to save. Remember to keep your goals realistic and broken down into short and longer term – this way you’ll feel like you’re making progress all along the way.
Know your finances – Without knowing where your money is going you’re never going to be able to manage your cash effectively. Identify your cash flows by writing down exactly where your money goes each month. Once you have determined fixed costs, work out where you can reduce your discretionary spending to bolster your savings potential. From there, create yourself a monthly budget in order to stick to your savings plan. Don’t bite off more than you can chew or you’re likely to end up fed-up and disillusioned. Instead, start small and remember to keep a small allowance for those special things you really enjoy.
Slash debt – Credit cards and personal loans can quickly erase your capacity to really get ahead financially, making saving goals much harder to achieve. Aim to reduce and eliminate any personal loans and credit card debts immediately.
Automate – When it comes to maintaining a savings plan the most effective way to do this is by taking it out of your hands. Set up an automatic savings account that will withdraw and set aside a certain amount every payday. If your money is out of sight it will be out of mind, making it much easier to avoid the temptation to spend.
Evaluate – Don’t set a savings plan and forget about it; it needs to be revisited regularly. If you’re struggling, don’t give in…simply adjust. On the other hand, if you’re finding your savings plan a breeze don’t be afraid of upping the ante and putting more aside.