Finance

10 tips for saving for a deposit

Saving for a deposit shouldn’t take too much brainpower, nor should it take too much effort. As long as you set up a few things at the start of your saving and follow through with a few commitments, then it’s all a matter of playing the waiting game as you wait for your savings to accumulate.

1. Work on your self

One important thing to understand before you start saving is that your happiness is linked to your ability to save. We can’t be happy 24 hours of the day, but if you are generally unhappy, there is a strong chance you will become less focuses and driven in your saving habits. At worst, you may start spending your savings. With this in mind, look to practices that can help your general mood, such as mindfulness practice, meditation or yoga as well as eating well and exercising.

2. Choosing your targets

In line with making sure you remain content and generally happy, make sure you choose your savings targets carefully. What this means is spending money on the things you care about, and saving money on the things you don’t care about. If you don’t care what brand your butter is, can you save any money on this purchase? If so, actively dedicate these savings to your deposit, pretending that you spent that extra money on the butter but using those extra $3 for saving for a deposit. But if there are some things you absolutely care about and love, it may not be worth sacrificing your happiness on not having these if it risks translating into lazy saving somewhere down the line.

3. Automate your saving

Make the process of saving for a deposit as easy as possible. Automatically deduct 10% of your pay into a separate account, eventually creating a term deposit account if this suits your targets. If you don’t feel squeamish about technology, there are apps that help you manage your funds so that money you save on purchases etc. automatically end up in your savings. However, these apps do require access to your bank account, so be aware of your legal rights when allowing a company (possibly an overseas company) access to your finances.

4. Move around cheaply

Do you really need a car in the next several years? Remind yourself how much you actually spend on your car (if you do own one). Insurance, registration, servicing, purchase cost and fuel…that’s some serious dough that is not going towards your deposit. The best way to decide this is to jot down how often you use your car (write down how often you used it in one week and then decide on an average) and weigh this up against using a car share company or hiring a car in those occasions where you may want a car.

5. Find a supplementary income

Is there a way you can earn an extra, small income? Consider tutoring, babysitting, teaching music (as long as you are musically gifted). If you can earn this small extra income with just a few hours of work each week, you will be surprised at your savings growth.

6. Create a budget!

It’s hard to make that one sound fun, but it is a must have for any savings-tips-compilation. Look at how much you spend vs your incomings and highlight areas you can improve upon. A budget helps you get a general overview of your finances, and will give you a realistic view your savings timeline.

7. Get help from others

Have you considered developing a crowdsourcing campaign online? While it probably isn’t reasonable to expect your friends and social network to pay for your entire deposit, perhaps you could raise a small fraction of this deposit through crowdfunding. Brainstorm creative things people may want to put their money towards, such as a $25 contribution giving them a terribly embarrassing CD of you singing Bruce Springsteen covers, or $100 giving them a beautiful dinner that you have made as cheaply as is humanly possible. The key to a crowdsourcing is not to promise things that will cancel out the donation given.

8. Downsize to save

Can you find a place to live that may save you an extra $25-50 per week? As long as the move does not compromise on your happiness too much, you may find that you never needed that extra space that $50 provided. Make sure you dedicate the same amount of money you save towards your deposit.

9. Partner up!

Without spruiking any obvious dating apps, nothing makes saving easier than joining forces with a loved one! Alternatively, join forces with one or more friends and look to buying a property together. If you are in a relationship and are saving for a deposit, don’t forget to occasionally spend money on the sorts of experiences, such as holidays, that help foster a connection in a relationship. There’s no point in being miserable together!

10. Look elsewhere

To slightly expedite the process of saving for a deposit, why not consider moving to somewhere cheaper? Look at regional areas or cheaper cities. If you don’t want to necessarily live in these areas because you have a strong connection to where you are, then this purchase could be an investment property. Check out our post on investing in metro vs regional areas to know the risks of investing in an area you aren’t familiar with.