Save For A Home Loan Deposit
Saving for a home loan deposit may seem like an impossible dream for young adults, especially if you are in the middle of a uni degree. It's usually something you think you'll do later on, or something that you can only do later on, definitely not now. So you put it to the back of your mind and don't bother saving. You go out every weekend instead, or you might save, but only for fun things, like holidays or the latest fashion. But if you really want to, you can build up enough cash to have a deposit ready to go when you want to buy a house.
Most uni students are only working part-time, if at all, so although you might not be able to pay off a loan right now, and probably won't be approved for a home loan until you work a bit more, you can still use this time to save for a deposit so when you do graduate you can get straight into the property market. The longer you stay out, it is likely that the prices of houses will just continue to rise, and therefore the harder it will be to get yourself on the ladder.
Say you are an average uni student, working about 3 days a week, each day is an 8.5 hour shift and you earn about $18 an hour. Take out your lunch breaks and that's 24 hours a week, and you'd be paid $480.00 (not accounting for tax).
Now let's pretend you spend nothing (impossible, but bear with me), here comes the magic part...
$480 per week = $1920 a month = $24,960 a year! If you are in a 3 year uni degree, by the time you graduate you could have saved up a whopping $74,880!
Sound exciting? Want to take it up a notch. Okay you asked for it!
Say you are extra special, and you work a Sunday every week as well as your usual 3 days, of course at a higher pay rate of time and a half. That's an extra $216 a week, for one extra day! Which takes your yearly total up to $36,192, and let's say you are enrolled in a combined degree, or decide to continue studying, for a total of 5 years.. Are you ready for this?
The total amount of money you will have earned would add up to $180,960! Forget the deposit, just buy the house!
Now that I have got your attention, we have to get real for a minute. Of course you aren't going to be able to spend nothing, and you will have to pay tax, so lets say after your spending and your taxes, you still save about half of what you earn. That still means that by the time you graduate, you would have around 30 thousand in the first example, or 90 thousand in the second example. Either way you'll have more than enough for a deposit for a home.
So folks, there's no need to put it off, no need to think 'Saving for a home while I'm at uni? What even?', as you can see by the examples above, it can be done!
Are you with me? Are you really with me though? If your answer is a 'YES!', then here are some tips that can help you on your way to saving for a house deposit.
Don't get a car/Sell it if you have one.
Owning a car and saving money are often not two things that go together on a tight budget. As soon as you buy a car, you are throwing money away, services, insurances, registration, petrol, repairs. It never ends! Instead, use public transport. Sure its much more relaxing to chill in your own car on the way to uni, but you are on a mission here! A mission to save, and chilling in your car instead of taking a bus or a train could have a huge impact on your savings.
Also remember to get your student discount card/sticker/however it works in your state, so you can get discounts on travel. Buying a weekly or monthly pass can save you even more money.
Be wary of Credit Cards.
We were going to write, 'Stay away from credit cards' but sometimes credit cards can help you save. Surprising right? Well if you are a disciplined saver, and not an impulse spender, using a credit card can help you manage your budget, plus if you have the time to properly manage your accounts you can earn more money.
Instead of spending your own cash on each little thing every day draining the cash out of your account, put all these spendings on your credit card and pay the total every month. This way you can leave your cash in your savings account for a month earning interest. You will be in-front as long as you don't forget to pay off the full balance of your credit card at the end of the month, or the end of the interest free period on the credit card.
Also look for a credit card with no annual fee, otherwise the interest you earn by carrying out this tricky process may be paid out on the credit card fee. Be careful with rewards cards as well, they rarely come with no annual fee. You can check out some no annual fee credit cards here. Combine this with a high interest rate savings account for effective saving!
Grocery Shopping Ideas.
Only take cash with you to the supermarket, this way you won't accidentally overspend, and, even though it might be a little dorky... take a calculator with you so you can add up the total bill as you go, adding each item as you put it in the trolley. You can always use your phone instead of a calculator, if you think it would be too embarrassing to be seen with a calculator.
Write out your weekly menu before you go, then only buy what you need for what you are going to cook!
Buy meat when it is on special, you can freeze it and use it when you like.
Shop around at multiple supermarket chains. Combine Coles, Woolies and Aldi, to get the best prices. One week Coles might have cheaper beef, while Woolies has cheaper Veggies, and Aldi, well Aldi usually has cheaper everything else.
Go out, at home.
Huh? This no make sense? Well, what we mean is, watch movies, have a drink, have dinner, do whatever you'd usually do with your friends when you go out, but invite them all around and do it all at home instead! No entry payments, no overpriced beverages, no taxi fares, and no need to get dressed up!
Set up automatic savings transfers.
Using online banking, you can easily set up an automatic withdrawal on any day of the week, for any amount. This way you can set your bank account up to take out a certain amount of money from the account your pay goes into, and transfer it to a savings account you have set up. Then you'll never forget to save, and everytime you want to spend this savings money, you'll have to take that extra step and transfer it out of your savings account, hopefully giving you more time to think about whether or not you really want to use this money!
Also remember that this is not financial advice for you in your situation. These are some general thoughts about what students and others with a tight budget could do to save for a house deposit or other investment. Speak to a qualified financial planner if you would like to map out a plan for your individual financial future.