Saving up for the initial deposit for your first home is a daunting process. It can be very overwhelming for someone who is already struggling to save money. All the latest advice seems to be creating more confusion, and it becomes a lot harder to set up your finances so that you can one day buy your first home. However, the good news is there are several simple steps you can take to help save up for your first home.
Consider moving back home.
Not everyone has this option, but if you can, moving back home with family can allow you to grow your savings considerably quicker than if you weren’t. Moving back home will enable you to save both money on rent and increase the amount of time you can save each day. Moving back home can also make it easier to keep up with your bills, increasing the amount of money you can save.
Pay off your debts
Paying off any credit debt you have will allow you to quickly save money, as you are not paying interest on these debts. Credit card debt can be tough to pay off as the interest rate is very high, and there is often an annual fee attached to the card. If you have any credit card debt, try to pay it down as quickly as possible so you can start saving more money. Don’t forget other types of loans also have high-interest rates, such as student loans and car loans.
Create a budget
Knowing where your money goes each month can help you save and plan. There are many money management apps available on smartphones or a notepad on your computer. Creating a budget will allow you to better plan where to spend your money. With the average house price in the UK being £256,405, it is clear that saving for an initial deposit of 5% of the house price will take a long time.
Check your monthly outgoings.
Over time monthly bills creep up as suppliers implement tariff increases or you buy more expensive products. Suppose you are having difficulty managing your money. In that case, it is essential to check your monthly outgoings and cut them down where possible.
Using comparison websites is an excellent way to see if you could reduce your current tariffs or policies to a low monthly amount. Broadband suppliers are among the worst offenders for increasing their prices mid-way through a contract. Some suppliers such as BT offer price freeze tariffs which cost extra but make you immune to tariff increases. Using a dedicated broadband comparison website can help you find cheaper broadband that will still allow you to stream 4k and not be slowed down.
Try money-saving apps
Money-saving apps such as Plum and Moneybox offer automatic savings and roundups that round up your purchases to the nearest pound and save the difference. This is a great way to save money by saving small amounts over time and not noticing the difference. It’s also an excellent way to get yourself into the habit of saving, as it becomes a part of your daily routine. As well as saving what you would have spent, some money apps offer extra incentives such as gift cards or getting tickets to popular events for free. These can be significant incentives to sign up for money-saving apps and are great ways to make savings without changing your lifestyle.
Set a date or end goal
Setting a date can help you get motivated to work towards a goal. Planning is crucial if you want to be able to achieve your goal. If you’re going to save £20,000 and have the end goal in 3-4 years, you can set up an automatic monthly saver of around £400 a month. Moving closer to the end goal will feel like you’re making progress and will make you feel more motivated.
Saving for a house is a huge step in life and can feel quite overwhelming at times but as you get closer to the end goal, remember that your own home is the light at the end of the tunnel.