Owing your own home is many peoples’ dream but how to save up enough money for the deposit can seem a daunting prospect. While it is good to ask relatives for money for your birthday and Christmas to boost your ‘buy my house’ fund, there are a number of money-savvy ideas that can really help you to start saving.
The very first step is to work out the budget for your first home. You need to know your price range and how much you will need to save for the deposit. You also need to know what type of mortgage you will be able to secure, what the monthly repayments will be, and any good schemes that you are eligible for. Having a target figure to achieve is essential as it will really help you to focus on hitting it!
Here are our 10 ideas for helping you to start saving up to invest in your first property:
1. Work out your budget
Do you really know where your money goes each month? Look at your bank statements and credit card payments and work out your monthly expenditure. There will be a number of essentials such as rent, utility bills, student loans and car or transport costs. There will also be non-essential bills that include holidays, restaurants and entertainment. Once you have calculated your total expenditure, you will be able to calculate how much money you can save each month for your ‘buy my house’ fund. Set up a standing order for the money to be transferred to a separate account as soon as you get your wages, so that you are not tempted to spend any of it. The percentage you should be aiming to save or invest is 25- 30% of your monthly wages.
2. Can you save money on your accommodation?
Many young people move back in with mum and dad because it is an effective way to save money. If this isn’t an option, can you cut your rental costs? Consider moving into a smaller flat in a less attractive part of town or further out from the centre, where rents are cheaper. Could you get a flatshare to reduce the cost of bills? Sub-letting a bedroom (with your landlord’s agreement) is another option as is renting out an unused driveway.
3. Reduce your living expenses
Check that your utility bills are as low as possible. Are there cheaper providers? If the answer is yes, discuss switching companies with your landlord. Get value for your money when it comes to food shopping – you will find that your money goes much further in certain supermarkets.
Is your car economical to run? If not, it could well be worth changing it for a smaller, more economical model. Can you do a car share with any of your work colleagues? If you use public transport to get to work is it worth using a bike instead? This is definitely a more economical option and will keep you fit too. You can always opt to do mix and match and be a fair weather cyclist as you will still save pounds!
4. Ditch those bad habits!
If you have been planning to quit smoking for ages, now is the time to do so and you will be delighted how much extra money you will save each week. Drinking can also be costly as can takeaway meals and even takeaway coffees! Don’t bin them totally, but reducing them to a weekly treat will definitely give your ‘buy my house’ fund a significant boost! Cooking for yourself every day is definitely the cheaper – and more nutritious- option.
Check what subscriptions you have – do you really need them? Thousands of people do not realise that they are still paying money for a subscription they no longer need or use. Are you still paying membership for the gym you have not used for six months?
5. Do you have unwanted kit?
If you are a hoarder, why not have a good sort out and sell any unwanted kit on eBay, Facebook or similar? You may well have a sports kit that you no longer use or clothing that you have never worn and you will be amazed how much you can make from selling them!
6. Is it time to switch jobs?
Do you feel that you deserve a higher income? Are your contemporaries better paid than you are? If the answer is ‘yes’ maybe it is worth considering a change of jobs or a career change. If you are happy with your work, is it worth asking for a pay rise?
7. Consider doing a second job.
A way to significantly increase your income is to have a ‘side hustle’ that you can do in the evenings and at weekends. These include writing, graphic designing, photography, answering surveys and babysitting. Other suggestions include working in a restaurant or as a takeaway delivery driver. If you are a musician or singer, you will be in high demand. The key to success is not to over-commit yourself otherwise you will get over-tired and stressed.
8. Check that you are not in debt
Debts cost money and will not be looked on favourably if you are going to be applying for a mortgage in the near future. Clear all your debts as quickly as you can and make sure that you do not pay for anything with a credit card – if you can’t afford to pay cash, then don’t be tempted to buy it!
9. Skip a holiday
When you start saving for your house, one of the luxuries you may have to forgo is your holiday. While you will not be able to afford a globe-trotting special, you may well be able to think of a much cheaper option, such as going to stay with some relatives or friends or borrowing some camping kit. It may feel like a loss to skip a holiday or downgrade it to a less luxurious affair but saving for your future will bring other benefits which should exceed this absence. By no mean are we suggesting 100% prioritization of saving over living.
10. Can you get some help?
The UK property market is very buoyant at the moment and it would be great if you could get your foot on the first rung of the property ladder as soon as possible. Is it worth asking your parents, uncle or another close relative if they can help you with the deposit so that you can buy more quickly?
Have you got a sibling or cousin who is in a similar situation to you and could be keen to buy a property with you? This is a great way to get on the property ladder sooner. You can sell the property further down the line and by that stage you will both have accrued enough in savings to pay the deposit on your next home.
Hopefully, having read our suggestions you feel less daunted and more inspired about investing in your first property. Why not launch your ‘buy my house’ fund today? You won’t regret it!
Continue your search for knowledge:
The best property investment books and books about saving money are packed full of tips about saving for a deposit.