Budgeting tips you should consider when saving for a house deposit

Your own home is almost certainly the biggest purchase you’ll make in your life, and having enough banked up for a deposit is a super big deal. Do you ever think, how do people achieve the goal of saving for a house deposit?

Sure, they might have a pretty strict budget and yes, they probably possess a steely motivation and drive, but what’ve they got that you don’t? Are you doing everything in your power to achieve such an ambitious savings goal?

There are a few ways to build your home deposit faster, and here are just a few you should consider implementing if you’re serious about breaking into the property market. You could be in your own home sooner than you’d thought.

#1 Actually learn to budget when saving for a house deposit

If you don’t have a solid budget in effect yet, your time to start is now. Budgeting allows you to spend your money smarter, by identifying exactly where all your funds go and coming up with smarter and possibly cheaper alternatives.

The Australian Securities & Investments Commission’s (ASIC) Money Smart Financial Guide on Saving For A Home says writing down your essential costs, such as rent, bills and food then subtracting the amount from your income allows you to see what you could potentially be saving for your home deposit.

With that figure in plain view, it may just be the motivation you need to stick to your savings plan.

#2 Move back in with your folks

Deciding to move back in with your ’rents isn’t a new phenomenon, and it’s no secret that the price of a rental can be astronomical. Renting takes a big chunk out of your income every month, and it’s money you’ll never see again. You’re basically helping to pay off someone else’s mortgage.

If you can minimise or eliminate such a massive expense, you’ll be cheering.

Plus, if you’re folks are flexible they might not even ask for you to pay board.

Just make sure you make it as easy for them as possible and pull your weight – you’re not 12 years old anymore.

#3 Reassess your current living situation

If moving in with Mum and Dad is a firm no, take a look at your current living situation. Are there any changes you can make to minimise your cost of living?

For example, you may consider moving to a smaller rental in a less popular area to knock down your rent a bit. Or if you’ve got a spare room you might consider getting a roommate to split the rent and bills with.

Every dollar counts when saving for something as grand as a house deposit.

#4 Know what government incentives you’re entitled to

If you employ good savings techniques, you’ll eventually reach your goal of having enough saved for a house deposit. But it’s also important to know where to look for a helping hand, and the incentives you’re entitled to.

If this is your first time buying a house, you could be eligible for the First Home Owner Grant. The scheme was introduced in 2000 to offset the effect of GST on home ownership.

How much you’re eligible for varies from state to state, and is only applicable to brand new homes, apart from townhouses. Basically, the key requirement is the property mustn’t have been lived in before.

In NSW, first homebuyers are eligible for a grant of $10,000 for a new dwelling, which can be used as part of their deposit – a real leg-up when looking to buy a home.

There’s also a relatively new initiative, which was announced in May of 2017 called the First Home Super Saver Scheme, allowing first homebuyers to save a home deposit with their super fund.

Under the scheme, you’ll have the ability to make voluntary superannuation contribution with existing contribution caps, and up to $15,000 of those voluntary contributions made in a financial year can be withdrawn to purchase your first home.

The maximum you can take out is $30,000 in total, plus an amount that represents deemed earnings. Best of all, non-concessional contributions and earnings can be withdrawn tax-free.

Saving for a house deposit is hard, but not impossible. Just stick to making smart and well-informed money decisions and you’ll get there. Feel free to contact us at 08 8231 4709 or send us an email at info@centrawealth.com.au to find out how we can help you get that dream house.

Article reproduced from TheCusp
by Bradley Johnston

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Zac Zacharia (Managing Director) has been assisting clients to create wealth and secure their futures for over 14 years.

He is also an accomplished presenter and educator

Co-authoring the popular investment book, Property vs Shares.