If you are looking at buying your first home, chances are you will need to make some cutbacks in your spending habits to help you save up the required deposit.
Saving can be tricky, but there are some tips to make it easier.
Set a goal
If you know what you need to work towards, saving can be a much more manageable experience.
You'll need to work out how much you can borrow so you have an idea of the price range you can buy into. Deposits need to be around 10-20 per cent in most cases. There are some great online tools and mortgage calculators which will help give you an idea of the price range you should be looking at.
However, when saving for the deposit don't forget to include the essential costs associated with the move, such as the home inspection, stamp duty, closing costs and other moving expenses.
Once you move in you will have additional costs to bear such as those for maintenance and you may need to adjust the amount you set aside to pay utility bills as they may be higher than expected.
Many people find it hard to stick to a budget as they try to cut too much out. Write down the essential costs like rent, bills and groceries.
Subtract this from the income you receive after tax, but don't forget to add incidental expenses, and the occasional treat – but make sure it is something of value, rather than something frivolous.
Build these treats into your budget and use them as rewards for successful saving.
You may also want to plan for emergencies. Set aside a small portion of your budget to allow for unexpected expenses so you don't get caught out.
Set up savings account
While you may be tempted to leave these savings in your everyday account, it means you run the risk of accidentally spending it.
Set up a savings account and deposit money into it regularly. You can get high interest accounts that charge fees for withdrawals. This may prevent the temptation of spending your savings.