Handy tips to help build your first home deposit

Saving for a house deposit seems to be so increasingly difficult, that's what you’ve been thinking, isn't it?  So, here's the deal, this doesn't have to hurt. You don't have to go without a TV or eat beans and rice for every meal to save enough money for your first home. Instead, start following the five simple tips.Incorporate them into your spending habits every month and see how the dollars quickly add up. Who knows.......You could end up saving hundreds or even thousands of extra dollars per month! Or maybe I'm just over confident that my tips would definitely work, hehe. Let's find out.

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‍1. Learn to Say NO…and Stick to It

‍What do you do in the situation when everyone else has steaks and lobster, and you have ordered a dinner roll? It can be frustrating when you are out for dinner and the other guests want to split the bill equally.  

If you are not in a place where you can or want to spend money, learn to say so with confidence. Instead, invite your friends over to your home, cook something together, or ask them to pitch in and bring a dish and kick back to watch Netflix. Reduce going to cafes unless you really need to. Remember this, “Keeping Up With the Joneses” is an expensive and unnecessary pursuit. Don’t fall prey to the feeling that you have to spend money in order to impress other people.

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So, figure out which habits of yours are draining your budget, and evaluate whether keeping them up is really necessary. You might realise that by following just this simple rule, you can save at least $100-$200 a month!

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2. SELL your unwanted, or unnecessary items

Heard of this phrase, one man's trash is another man's treasure? This simply means cleaning out your closet and turning the unused stuff into cash. Let’s say you no longer work from home ,  do you still need a study table/chair? If not, sell it! Or, you have already replaced your old phone/laptop with a new one, then sell the old ones! If any clothes are lying around that you don't wear anymore for whatever reasons, again sell. Sell, sell, and sell anything (furniture, old TV, fridge, etc) that you come across as unwanted/unnecessary because it will be useful for someone, plus you are making money. On top of all this, you will feel good to simply have all of that unused stuff gone from your life. Plus, you’re saving stuff from landfill, so give yourself a pat on the back for helping the planet while you help grow your bank balance.

So, here are some methods of selling you could use:

• Online markets such as eBay.com.au, Gumtree.com.au, Facebook marketplace, and shops on instagram.

• Hold your own garage sale or take items to a garage sale hosted by a neighbour or friend.

• Post flyers on local community bulletin boards.

• List items on your social media feed. You’d be surprised how effective this is!

• Sell them for scrap or to a junkyard.

• Donate the items and get a tax deduction.

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Even if you follow one or two of these tips, you can potentially make a $200-$1000 quarterly, which equates to  $600-$3,000 per year.

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3. Create a second income

One of the fastest ways to earn money is to leverage the skills and resources that you already have at the moment. For example:

• Invest in stocks, bonds, and/or real estate/property.

• Launch an online resource such as writing e-books, videos, podcasts, and whatnot.

• Tutoring. If you love teaching, you can easily earn $25-$36 per hour.

• Leverage the power of Amazon, you could sell a product and develop a presence directly on Amazon without the need to take on so many roles.

• Join the sharing economy, you can rent out your car, or as simple as your camera equipment lying around your house.

• Host an event, charge for it with a reputable guest speaker.

• Do what you love to do. For instance, people who love skydiving can get certified to teach and do jumps on the weekend. Or if you like designing, you can simply freelance as a “web and graphic designer”. In this circumstance the choices are endless.

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Even if you follow one or two of these tips, you can potentially make a $60-$100 weekly, which equates to  $2,880-$4,800 per year.

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4. Lower the rent you are currently paying, or Rent out a spare room or even your garage

Accommodation and living costs are the single biggest expenses for Australians.

It might seem obvious, but reducing your living expenses is a great way to save cash. If you’re currently paying  $500 per week rent, then consider moving to somewhere you can pay less, say $400/week. If moving isn’t an option, you could always consider asking your landlord for a rent reduction. If you are able to tweak your rental costs to save an extra $100/week  that results in extra $5k towards your deposit in just one year.

Another thing you could do is if you have a spare bedroom(s), then you could make some extra bucks by renting it out. In Australia, a room can be rented anywhere from $50-$200 per week, especially the ones closer to the city, and if you’re located in the city, you can easily save $100-250 per week. Even if you don't have a spare bedroom, but you have a spacious master bedroom, and you are comfortable living with someone, say a friend/family member, boyfriend/girlfriend, or just a random stranger, then you can still save a few 100’s in this way. That's easy $2,600-$10,400 extra per year that you could be putting towards your deposit.

Otherwise, if you live in a busy neighbourhood and in a house, you can rent out your garage for $25-$70/week as well. That's easy $1,200-$3,360 that you could be adding to your savings. What if you could rent out a room and a garage at the same time? Alternatively, you could rent out parking at your property (if it’s in high demand in your area) and charge a monthly fee for someone to use your parking space. That would be your rainy money day moment!

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Even if you follow one or two of these tips,  you could potentially  save $50-200 a week, which equates to $2,400-$9,600 per year.

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5. SAVE on Membership Services & other Miscellaneous Expenses

Here are what you can do:

• Slow down your internet service. As long as you are not working as a software/IT/digital marketing specialist, dropping to a lower and more appropriate speed could reduce your monthly bill by $35 or more, depending on your carrier.

• Cancel unused membership subscriptions, check your phone/laptop settings to find out which members you have signed up for.

• Split the cost of your streaming service plan with your friends and family members, for example, Netflix, Stan, Amazon prime, etc.

• Cancel your gym membership. Go for less expensive exercise options like:

               - Gym/yoga/jogging at your local park

               - Workouts at home

               - Following Youtube workouts rather than forking out for a PT

• Healthy diet planning

• Play your favourite sport with your friends such as tennis, basketball, swimming, etc.

• Look out for specials. Aldi provides great products, anything from electronics, like LCD TVs and DVD players, to clothing and furniture at such low prices every Wednesday & Saturday.

• Look out for food on clearance. Otherwise, go to Costco for bulk buying. We also have a 5 mins blog post on 6 simple hacks to save thousands a year on grocery, read more here.

• To save on utility bills, one way is to dry your clothes using a drying rack, avoid machine drying as much as possible. You can cut around $15 per month.

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Even if you follow one or two of these tips, you can potentially save$30-$55 a week, which equates to $1,440-$2,640 per year.

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The deal breaker: Compound all the money you earn …..

With all the potential savings you  make from following the above tips, you could save for a deposit somewhere between $5000-$15,000 a year, you can then increase or even double it using compound interest applications. Find out how you can do it by reading our  blog post here.

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Closing tips for the future: Consider buying a house, not a unit

I’m going to explain the reasons by dividing it into four main categories:

• Units require more security, which means higher deposit is also needed, especially units under 50 square metres.

• Look for the cheapest suburbs, and make sure it’s safe, near to train stations, supermarkets/grocery, etc.

• Consider dual occupancy, purchase a house with a four-bedroom, and convert it into 2 x 2 bedroom flats. Live in half of the property and rent out the other half. You can even rent out on Airbnb or to businesses to open office branches.

• Invest with a TRUSTED friend or family member if you go halves in a property with a friend or family member, which can significantly reduce your deposit because you only need half a deposit, not a full deposit. Maybe consider buying a Duplex? You could purchase a block of land and build a duplex so that you each have your own separate house. Remember always to have an exit strategy if you decide to do this. If things go pear-shaped, it helps to have already decided your way out and legals in place.

• You can also check out our blog post on the First Home Loan Deposit Scheme and whether you are eligible for it here.

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Disclaimer: The author is not a financial advisor and the information provided is general in nature and was prepared for information purposes only. This article should not be considered to constitute financial advice. Accordingly, reliance should not be placed on this article as the basis for making an investment, financial or other decision. This information does not take into account your investment objectives, particular needs or financial situation.