Best Budgeting Tips for a Home Loan Deposit
Here are our Best Budgeting Tips for a Home Loan Deposit!
Budgeting for a home loan is not the answer to simply getting a higher borrowing capacity. Responsible lending means you should only be applying for the loan amount which is appropriate to you.
If you cut back on all your regular expenses for your home loan application, only to go back to your previous lifestyle after you buy a property then you may find your loan repayments place unnecessary financial stress on you which is not what anybody needs or wants.
If you decide that owning a property is important to you and you are willing to forego lifestyle choices to achieve that, then make the changes and enjoy the reward of your commitments.
Here we dive into a number of ways to save for that deposit:
Make a few small changes and you'll get there, make big changes and see big results.
Make your meals
Yes, this takes time! You also need to plan ahead with your shopping, get a little creative on the meal options, and potentially also discover what a pot and pan are used for in the kitchen!
We have clients who get Deliveroo daily simply because it's easy and convenient however when they look at their savings account to see it is almost non-existent, this change can save big bucks.
How much does a basic lunch meal cost? $9 for a 6-inch Sub, $8 for a pre-made sandwich, $13 for a fast food burrito, or $15 for a food court meal?
Then compare that to a nice pre-made salad, pre-made spaghetti, rice dish, stirfry, a box of vege with dip, or any other quick and easy homemade meal.
I used to make a big lasagne, cut it up and freeze it, then take a basic salad to have and run the numbers on this. It cost me less than $5 per meal.
If you just cut your weekly lunch expense from $60 to $25 per week = $35 x 48 working weeks a year is $1,680 per year saved!
Forego brewed coffee
If you're a coffee lover, then perhaps this is an insult to you! However, if your workplace provides coffee (even instant) or you can cut down your daily intake of brewed coffee, you could see a lot more coins in your pocket.
Let's pretend a regular size coffee is $4 and you like to have two per day, let's also pretend you are HIGHLY MOTIVATED to save for a home and you are willing to forego the coffee for a cup of tea, some refreshing water, a herbal tea or even workplace instant coffee!
$8 per day = $40 per week x 48 working weeks a year is $1,920 per year saved!
Turn off your power switches
We cannot begin to calculate the potential savings here as there is no common household example. You may have lots of devices, old refrigerators with poor seals, live in a location where air con is needed most of the year, etc. but turning off your power switches after using a device (kettle, toaster), turning off lights when you leave a room, turning off all power when you go away for the weekend or on holidays is simply a good thing to do for your budgeting, for the environment, for your energy consumption and carbon footprint. So regardless of budgeting needs, adopt this habit anyway!
Find cheaper fuel
With a very quick Google search, it looks like the average fuel consumption is 1,800 litres per year and 15,000km travel distance. Based on this information if you planned where you get your fuel from (not just what's convenient) and saved $0.05 per litre, you could save $90 per year. Not much but let's consider this a little further.
In the area I live, I can find a price difference of $0.35 between a major fuel supplier and a budget supplier just by turning off the main road.
One tank of fuel per week with a 50L top up = 2,600 litres
If the average annual savings by looking at cheaper fuel stops is $0.20, the potential savings in this example is $520 per year.
Public transport (avoid tolls)
If car travel is chewing up the cash on a weekly basis, perhaps it's time to consider public transport.
If it is an option and you can save some money by changing your travel method, you'll not only see the benefit in your bank account but you may also enjoy some time to read a book, study the property market, catch up on personal emails/admin and tick a few tasks off each day while someone else does the driving.
Eat out less
Similar to the lunch preparation, if you are the type of person to eat out 5 nights a week because you haven't made the time to learn how to cook, then perhaps it's time you invite someone over who does know how to cook and they show you how easy it is to use YouTube or pick up a cookbook!
Again, it takes some planning, you need to have something in the cupboards to be able to make a meal. To make the whole shopping exercise easier, try ordering online and do a Click-n-Collect so you don't waste time walking through the isles.
So let's take that $15-$20 per meal, take away or Deliveroo example, halve it and you're potentially on your way to saving another $50 per week x 48 working weeks a year is $2,400 per year potential savings!
Cheaper products (cosmetics, clothes)
Perhaps it's time to let go of ego and start buying something which isn't a designer brand name if you're getting serious about saving for a home loan deposit.
Stop unnecessary spending (consumerism)
If you struggle to walk past a shop without having to buy something, then don't go to the shops! Magazines, trinkets, smoothies, sweets, gifts, etc. could all be the little differences in your bank account's extra $50 per week.
Close unused subscriptions (gym, Audible, Stan, Netflix, etc.)
If you are a TV series tragic, perhaps it's time to do more than close the unused subscriptions too.
One of the most common expenses that accumulate over time (if unused) is subscriptions. The Gym Membership is a classic example of how people can get very motivated, and commit to a program for 3mths then something changes and the gym is no longer the priority. The membership isn't closed as it is used as a reminder to get back into a fitness regime but it doesn't happen.
Save $20 on digital subscriptions and you're another $1,000 per year ahead.
Put 10-20% savings away every pay
Let's pretend your household income (couple) after tax is $100,000. If you are budgeting well, putting 10-20% of your income aside before allocating it to lifestyle costs, that's a potential $10,000-$20,000 savings per year.
Below are additional ideas and from the above, I think you are getting the picture of how a shift in mindset, a different approach to how you do things can produce results, and the important thing to realise is, that lots of small changes add up quickly.
Without putting a number next to each of the above ways to save, you could achieve approx. $16,000-$26,000 savings per year. And let's be realistic, this is not an easy thing to do, otherwise, everyone would be doing it. Budgeting for a home loan deposit takes time and consistency, so if that's the goal, then start making those changes.
More of our best budgeting tips for a home loan deposit:
- Shop around for cheaper services (phone, gas, electricity, insurance)
- Try using free applications as opposed to paid apps
- Refinance existing debt for cheaper rates
- Look for deals (holidays, travel, accommodation)
- If you break a big note at the shops, keep smaller notes and coins in a savings jar
- Walk or ride to the local shops (it's healthy for you too!)
- Find a savings account with a better interest rate (does that exist?)
- Use an offset account or redraw for your savings
- Be disciplined when shopping for groceries
- Use up what's in your pantry
- Repair items rather than dispose of them (clothes, household items, etc)
- Limit personal care expenses (nails, massage, hair)