Saving money for a deposit on my house was the best year of saving I have ever managed. I never thought I would save so much either.
Everyone knows how to save money but I truly believe when it actually comes down to it not many people are any good at it. The main reason most people fail is down to a lack of planning.
There are of course other reasons for being poor at saving money.
Saving money for a deposit on your first property is extremely hard. In today’s financial climate it can be potentially impossible for today’s young adults.
My wife and I were looking to sell our first property and due to the poor state of the housing market at the time that we brought, this meant that we had no equity left in our property.
This basically meant that for us to get a 3 bedroom house which is what we required at the time we would need at least a 10% deposit. Prices at the time for a property with the size we needed meant that we would need a bare minimum of £20,000.
When you bare in mind that we still had a mortgage to pay and bills. We were also both working full time and therefore needing to relax at weekends etc this was a task that needed some forethought.
So we came up with a plan to save our asses off and the tips below are ones we implemented to save £22,000 in 12 months.
We realized early on that simply putting money away wouldn’t work. We needed some kind of structure otherwise we would be putting away different amounts each month. Not only that but possibly dipping into and spending some of the money which is a big mistake.
The first thing that needed to be done was to sit down and work out our Incomings. This was wages and any other income we generated.
Once this was done then we did the same but with outgoings. Usually, you will find the Incomings are not too bad and it is the outgoings that shock you.
So a budget planner is one of the first things to get sorted when doing any kind of saving. When saving money for a deposit on a home it is even more crucial you start with this.
I noticed I was spending £15 a month on private healthcare I hadn’t used and I had healthcare benefits elsewhere so it was a totally redundant expenditure. It may not seem like a lot but this was £180 extra a year we could put in the kitty.
Once you have your Incoming’s and expenditure down on paper in front of you then you can start to work out how much each month you will have left to put into your savings. That is once you get over the shock of what it all looks like written out in front of you.
Those morning takeaway coffee’s not looking like such a smart investment now eh!!.
If the amount you have left for savings is a nice amount then great you can save away and not make any changes to your routines or spending. Unfortunately, this doesn’t happen very often. Most of the time people are spending way more than they thought they were and a lot of it is not necessary.
So the next step to saving money for a deposit is to cut spending.
Cut The Spending:
Now you have worked out how much you are overspending, Yes YOU!!. You can also work out where to cut spending in order to increase your savings.
We found it was the little things such as meals out. We probably ate out twice a month. Nothing extravagant but a nice meal out together or occasionally with friends or for a birthday. It does all add up. We probably spent around £150 a month on average which is £1800 per year. WOW.
£1800 when you are saving for a deposit on a home could add up to 10% of the amount you need for your deposit. That’s crazy just for eating out.
As you can see the little things we take for granted such as a meal out with loved ones can all add up to a pretty penny. Below is a small list of some of the things you can cut your spending on although I’m sure when you look at the list you created you can see for yourself where you need to cut back.
TV & Broadband:
TV and broadband is a great way to save. Simply swapping from one supplier to another when they are offering good deals can save you around £50 a month. Another £600 a year.
As well as swapping suppliers you can also cut your package down. Fellas I know you need that sports channel subscription but just drop it for one year. The sports channels in the UK can add another £40 a month to your bill.
Dont forget when looking to swap to go through cashback sites. This can get you some extra cash just for swapping. Have a look at my article on Cashback Sites if you are not too sure about how they work.
Another not altogether necessary expense. Most of us spend between £35-50 a month having the luxury of large amounts of data and unlimited texts and minutes. If you are near the end of your contract try searching around for a better deal.
Mobile phone companies hold you to ransom. They make an effort to show off the latest shiny model but in all honesty, there is nothing wrong with having a phone that is a couple of generations older. It may just save you £20 a month. You just need to get over the fact that it is not the latest model. Still does the same stuff though right.
This is a simple one. Like most people we had a favorite supermarket where we went once every couple of weeks and did a shop. When we started saving however I looked around and started comparing prices for a lot of the main foods we brought on a regular basis.
So we started shopping at cheaper stores such as Aldi and Lidl for produce. I’m going to add it happens to be pretty good quality and also things like bread and dairy products. We brought our meat from a wholesale butcher and all of this managed to save us around £75-100 a month.
I started batch cooking as well as this not only saved us time during the week but also saved us money.
We then started keeping our receipts and used an app to claim money back. Head over to my article to take a look at how it works.
Sounds very drastic, doesn’t it. My wife and I didn’t have this option as we had a mortgage plus nowhere to go.
However, if you are currently renting while saving for something large such as a deposit for a house then it might be worth seeing if you can move in with parents or relatives for a few months.
Paying out for rent or a mortgage while trying to save a large amount of money is very hard. We managed to do it but it was a hard year I can tell you that.
Get A Lodger/Student:
If you have a spare room then it is always an idea to get a lodger or student. This can help bring in some extra money for your savings pot. A spare room can bring in a few hundred pounds per month.
We had students for around 5 years and while it wasn’t always plain sailing it did make us around £3500 a year in extra cash. This was for only 6 months out of 12 so it really wasn’t too bad. If you are interested then take a look at my journey with having students and you can make a decision as to if it is right for you.
So once you have worked hard getting your savings started you are going to need to make sure they work for you. If you’re intending on saving for a period of a year or more then you need to make sure that your hard earned money is going into a high-interest savings account.
Make sure you pick a regular savings account. This will allow you to gain access to your savings whenever you need them. No point in saving for a deposit and then not being able to access it when needed.
The long and short of this article is simple. If there is something you really want, In our case a new home then you need to dedicate yourselves to it. You don’t need that takeaway meal. You don’t need that sports channel subscription. These are all things that you can live without for a few months or a year.
Won’t it all be worth it when you move into your new home. I mean you won’t have any money left to needlessly spend but you will have achieved something great out of your own hard work.
If you are looking for further inspiration check out the forums on Moneysavingexpert. They have lots of guides for savings and also buying your first home.
Let me know how saving money for a deposit on your first home is going. If I can help with any tips or advice then I will, Leave your questions in the comments section or drop me an email if you would rather.