Have you been keeping an eye on the property market, seeing prices rise in your city and wondering how on earth you will ever save up enough to get your hands on your first property? It might seem a little tough in today’s market, but there are some steps you can take today which can take you down the path of having that deposit. The reason why many people can never save up enough for their deposit is they simply give up hope. This is not to say they don’t bother or they try and fail. The fact is they just can’t see it happening based on how much they are currently earning, and spending. They might be earning $1500 each week after tax and saving 10% for emergencies. But where does the rest go? It is time to change the mindset from spending before save, to saving before you spend, if you really want to take saving for a deposit seriously. Here are 3 ways to start saving for a deposit today.
Have a Number in Mind
If you are setting any goal, you need to have a final objective in mind. This goes for any goal, whether it is weight loss, financial or career. Having the final outcome means you can track and measure how close you are to achieving it, providing you with a little encouragement every step closer you take. So for your deposit, having that final number allows you to work out exactly how much you need to save, how long you need to save for and when you finally reach the goal. You never know what else might come your way to help boost those savings and get you that little bit closer, even sooner. If you are looking to purchase a property of around $650,000 let’s say you are looking at a 10% deposit. To save up the needed $65,000 you would have to put away $240 each week over the course of 3 years. This might seem like a lot, but the next step might help you overcome any hesitation.
Save Before You Spend
Most of the spending we do isn’t too necessary. We get used to spending what we have in the bank because we know that’s what it is therefore. Without having any reason to put money away, we usually just want to enjoy it. There is nothing wrong with this, unless of course, you are saving for a deposit. This is where it helps to have that goal in mind. You know what you are working towards and what needs to be done to get there. When you have that money deposited into your account, your first step is to put it straight away. Locked into the deposit fund. This way you know that the money is off limits and nothing can be done to access it. This will allow you to readjust your lifestyle around your new saving goals, accepting that you now have less disposable income to spend on things to enhance your lifestyle.
Invest While You Wait
Leaving money in your savings account might be the safest option, but if you are looking for good returns, there are other options. In order to reach your goal sooner, investing the money you set aside for your deposit can help you compound those savings even further. If you are hesitant to invest in the share market, investing in bonds is a safe way to seek investment returns. If you plan on saving over the course of a year or more, government bonds can pay you both interest as well as a fixed face value. Combining this with continued investment each month and you can end up with a deposit much higher than you originally anticipated, allowing you to make a significant dent on your mortgage. You should always consult a financial advisor before purchasing any investment products, to ensure they are right for you and that you fully understand the conditions.
Following these steps will help you understand your goals and how to change your attitude towards achieving them. The property market might be heated up and prices may seem out of reach in many areas, however with persistence and determination, you can save up that deposit through just a little sacrifice. The worst mistake you can make, is to believe that the deposit is out of your reach. To give up hope, means you won’t even try and without even attempting to save, you might very well miss your chance!