When it comes to buying a home, the biggest challenge many people face is saving enough for a home deposit. But by making changes to your spending, you’ll soon discover it’s not as difficult as you first thought.
The end of one year and the beginning of the next can be the perfect impetus to reflect on your spending habits and pledge to make a change for the coming 12 months. So, when you’re listing your resolutions for 2019, use these simple tips to help inspire your financial goals for the year ahead.
Home prices and home deposit saving
Home prices are rising, along with the cost of living, but Australian wages are stagnant, making saving for a home seem nearly impossible.
By researching home prices in your local market and reigning in your spending, you’ll speed up your home deposit saving plan, so you can move into your own home faster.
How long does it take to save for a home deposit?
According to recent data, the median time taken for an Australian couple on an average income to save a 20% deposit is 4.9 years for a house and 3.6 years for a unit.
But this length of time varies from capital-to-capital because home deposit saving is relative to the median home price in these areas.
The table below gives an indication of the varying lengths of time it takes to save for a deposit across Australia’s capital cities.
|Average time taken to save 20% deposit (years)|
Source: Australian Bureau of Statistics (ABS), CoreLogic October 2018 & Bankwest First Time Buyer Report
According to a home buying survey of over 2,500 Australians, over 60% were concerned they might not be able to afford to buy a home.
So, how can you break the affordability cycle and increase your home deposit saving in 2019?
Look at your spending to boost your home deposit saving plan
The average weekly spend for a person aged under 35-years is around $849, and a couple under 35-years spends around $1,572 per week, with housing and food and drink making up the bulk of our spending habits.
|Average weekly household expenditure|
|Weekly spend||Singles||Couples||Couples with kids under 5||Couples with kids 5-15 years|
|Fuel & power||$24||$35||$48||$54|
|Food & drinks||$122||$239||$282||$336|
|Clothing & footwear||$18||$54||$62||$64|
|Medical & health expenses||$23||$69||$85||$104|
By working out exactly what you spend your money
Saving tips to help you save for a home deposit faster
It doesn’t matter if you’ve been saving for some time or whether you’re just starting, there are countless ways you can save more. Of course, it will mean you’ll need to make a few changes to your spending habits, but this won’t
Simple ways to save more include:
- Reducing your clothing allowance – If you’re a clothes horse who loves to have the latest fashions, it might be an idea to make do with what you have for a season or two, and – when you do spend – focus on buying timeless pieces that won’t date quickly. With the average outfit costing $100 or more, and the average cost of keeping fashionable adding up to around $200 to $400 per month, refraining from buying clothes for 12-months could add an extra $2,400 and $4,800 to your home deposit.
- Cutting down on groceries – We all tend to over-buy when grocery shopping. Those ‘buy 2 and save’ offers and other gimmicks have us spending far more at the checkout than we anticipate. But this doesn’t have to be the case. Before you go shopping, write up a shopping list and budget for the necessities and then stick to it.
Look for the cheapest products – swap brand names for generic and look for specials to find the product that represents the best value. Price tags in supermarkets usually provide a ‘price per kilo’ indication beneath the advertised price, which is a useful way to compare like products across brands.
Smart grocery buying can shave between $100 to $200 a month off your grocery bill, equating to a saving of $1,200 to $2,400 a year.
- Limit eating out – Look at how often you’re eating out – breakfasts, lunches and dinners add hundreds to your monthly spend. With the average meal costing $44, if you eat out once a week, then you’ll spend $2,288 on dining out in a year.
- Curtail buying coffee – The average Australian buys at least one coffee daily. At a cost of around $4 a cup, this adds up to a $28 spend weekly. Based on this, not buying coffee could save you $1,456 annually.
- Using less energy and water – By changing your bulbs to LED and turning off your power points after use, you can lower your electricity use and bill. By limiting your showers to five minutes and using low-flow showerheads, you can also reduce your water consumption. Opt to plant a drought-tolerant garden and use a watering can,
instead of a hose, to water any plants to reduce your water consumption. Smarter energy and water use can reduce your bills by hundreds, even thousands, of dollars in some cases, especially if you have a family.
Based on these examples, if you change these spending habits, then over the next 12-months you’ll put more than $7,344 to $10,944 towards your home deposit saving plan.
If you’re saving for a home loan deposit, then it’s worth discussing your borrowing power and potential mortgage repayment with an eChoice Home Loan Consultant. We have access to hundreds of products across a panel of multiple lenders, so – once you’re ready to buy – we can help you find a competitive mortgage.
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