In order to secure home loans, Australians are said to be tightening-up on their spending and putting more into savings. Undoubtedly, to save enough for a home loan deposit takes time, dedication and commitment. But what is new, is that a great number of want-to-be home owners are foregoing luxuries and they are putting the money that they would’ve spent on these into a savings account so that they can buy their home faster.
What Challenges are Being Faced?
According to a recent report on homeownership conducted by Westpac, some 40 percent of homeowners said that saving a deposit is their biggest challenge. To save faster many have opted to use high-interest savings accounts. These accounts allow them to deposit any extra funds they have into a separate account, which is not for everyday use. Many say that this is priceless as it acts as a deterrent to spend and your money works for you. Overtime the interest earned increases along with the amount held in the account, which means saving a home deposit is much easier.
How are Australians Saving More?
Many Australians have made lifestyle sacrifices to save more and to reach their deposit goals faster. According to the Westpac report, some 72 percent of study participants had made spending sacrifices. These sacrifices included the following:
– 8 out of 10 home-deposit savers ate out less often; and
– 61 percent decided to use home entertainment over going out.
Financial experts suggest that by making small changes to your spending you can save a great deal. Some changes you can make are:
– Taking your lunch to work, instead of buying it every day.
– Making your meals and home and not buying takeaway.
– Forgetting to buy the coffee on the way to work.
While these all sound like small costs, over a year they really add-up and you can save thousands for a home deposit. For example, let’s say you buy a coffee on your way to work every day and always buy your lunch. A coffee typically costs $4.00 and your lunch $15.00. By not buying these two items you can save yourself $95 a week, which adds-up to be $4,940.00 in a year.
By devising a strategy and setting yourself realistic goals you quickly enable yourself to save enough money for a home deposit. Your strategy should include setting up a high-investment account to put your savings in, as this will allow you to make your money work for you. You also need to plan how you will generate extra income to put into the account. Give yourself a minimum weekly figure that you will deposit into this account. Be vigilant, and you will find your savings accumulates quickly.
Do you want to know more about saving a home deposit? Contact eChoice and find out how you can save more.
Written by eChoice