6 tips to save for a deposit while renting
Paying rent and bills while saving for a deposit is often a struggle. But there are ways to accelerate your savings.
Trying to save for a deposit can feel like an endless process.
According to research from mozo.com.au, it would take a single person on an average income living in an average Australian city 10.8 years to save for a 20 percent deposit.
But there are ways to boost your savings while renting and get into your own home sooner. Take a look at our top tips below.
Create a specific savings account
Do you have multiple accounts for emergency funds, day-to-day living, bills and savings? It can be hard to keep track of the money available for your deposit if it isn’t separated from the rest of your cash. By opening a high interest savings account, you can keep all the money for your deposit in one place, and easily see it growing each month.
Get rid of unnecessary expenses
If you are serious about buckling down and saving for a sufficient deposit, you will need to start slashing unnecessary expenses. Of course there are some expenses you can’t avoid, such as rent and groceries, but there are others that can be avoided.
For example, day-to-day expenses such as your morning coffee or café lunch could be reduced or stopped altogether. Consider changing phone plans, particularly if you never go near the monthly limit. If you have Foxtel, ask yourself if you really need it - you may be paying for a lot of channels you don’t watch.
Have a look back through your monthly bank statements and see how you spend your money. You may find there are monthly memberships and subscriptions you forgot about and no longer use.
Move back home
If you are currently living by yourself, you may be struggling to cover expenses and save at the same time. Moving back home or moving in with other people can help reduce your expenses significantly.
While it may be difficult to move in with family or friends, just keep the big picture in mind. Home ownership may take a little while, but the payoff is worth it.
House sitting is a great way to live in different areas for almost nothing. Although you may be required to do a little housework and maintain the property, you will save hundreds on rent each month that will go directly towards your deposit.
Also, as you will be moving around in different suburbs, it can give you an idea about the type of area you would like to buy in.
Negotiate your rent
Rent is probably going to be your biggest expense, so why not try and reduce it? If you are planning to stay at that property for a while, speak with your landlord about reducing the rent if you take on a longer lease. Depending on the area you live in, you may find that the landlord is eager to secure a long-term tenant.
Set mini goals
If you are constantly thinking about the end goal of a 20% deposit, it can feel a little disheartening at times and hard to stay motivated.
This is why it is important to set yourself mini goals and reward yourself to help keep on track. Once you set your savings goal and decide how much you need to save each month, note down on a calendar the amount you will have saved in three, six and nine months. You can check back in and work out if it is still on track or whether you are ahead of schedule.
Rewarding yourself is also important. For example, every time you save a thousand dollars, you could treat yourself to a dinner out or buy a new piece of furniture for the new property. Remember, saving for a deposit is a process and won't happen overnight, so you don't need to starve yourself of a life for the next few years.
At homeloans.com.au, we have a number of calculators to help you work out how long it will take to save your deposit and how much you need to contribute each week or month. Our Lending Specialists can also work with you one-on-one to help you get into your own home sooner. Give our friendly team a call today on 1800 111 001 or leave your details here for a callback.
The opinions expressed in this article are the opinions of the author(s) and not necessarily those of homeloans.com.au. The above is general commentary only and is not advice tailored to any individual's financial situation. We recommend seeking advice from a finance professional before implementing changes relating to your finances.