Buying your first home brings a mix of feelings. All at once you are free, and yet tied down and committed to your mortgage. But before you can buy, you must save. And saving is hard. Not everybody has the will-power to turn down a night out with friends after a long week in work, all in the name of hitting monthly spending targets, but if you can envisage it and plan it, all that’s left is to do it. Easier said than done. For more information on planning your personal finance, see Creditfix. Otherwise, let’s take a look at how you could move into your dream starter home within a few short years of deciding that you’ve outgrown life with mum and dad – we all need our own space, but getting there is no picnic!
Stay at home as long as possible
Different deals in different areas of different countries mean that you will be expected to put down a mortgage deposit of anywhere between 5% – 20% of the total cost of the house. How do you know how much to save? Set a savings goal of five years. Whatever you can save in that time should be 5% – 20% of the total cost of the house, giving you a range of prices and property options to explore. We’ll get to how to save in a moment, but here’s the first tip: stay at home – with your parents or guardians – for as long as possible.
Now, as a young adult setting out in the world, your pay grade is unlikely to be very high. Your inexperience means you’ll be vying against other young adults for entry level positions, meaning that if you plan to move out while working your way up the ladder, you won’t have very much left to save. By staying at home for as long as possible, your bills can be kept to a minimum, meaning your savings pot will grow month by month at a much faster rate than you could ever hope to achieve while living alone.
Be weary of your everyday spends
If you’re going to save money for five years, make sure you save as much as you can by cutting down on your everyday spending. Five years is 60 months. That’s a long time to cut out things like clothes, entertainment, vacations/holidays, new cars, etc., and the problem can be made even worse where you meet somebody and start dating – love is expensive. That’s why the advice is not to cut out your personal expenditure in full, but to be weary of it.
If you don’t need new shoes, don’t buy them. If you don’t need a new work bag or a new laptop or a new hair dryer or new headphones, don’t buy them. The more you can save, the less likely you are to be annoyed at your five year savings achievements – because this will either lead to deciding that you must save for a further year or that you will have to look at cheaper housing.