Saving for a house deposit – will it ever happen?

With all the changes to lending criteria over the past years and elections throwing overseas investors’ ability up in the air, saving for a house deposit seems like something people did in the 90’s!

New Year’s resolution: “OK, I’m going to start saving for my house deposit, so I won’t buy coffee for the rest of the year.”  Yeah right.  I guess a week later (if you’re lucky), you will be clutching your take-out coffee and telling yourself you will start tomorrow!

A survey of 2,000 Americans by Capital One found that people are willing to sacrifice to save for a house deposit.  But what people are saying and doing are two completely different things.

Two-thirds of the respondents said for an extra $1,000 in savings they would give up internet for a month.  30% would give up their smartphones for six months and a 54% would give up coffee for rest of the year.  Really?

Time for a reality check. Whilst we are saying these sorts of things, we aren’t doing them. The Intention-Behaviour Gap has kicked in.

The article concludes by saying, “No matter how broke people are or how desperately they may want to save, smartphones are now considered by many to be more important than their toothbrush or sex!” (hmm, I know which one I would choose…).

So, how do you make sustainable changes to increase savings for your house deposit?

Here are 5 tips that will help you.

1. Be realistic and start small.
   If you are a two-coffee-a-day person every day of the week, cut back to one coffee on three days.  I can hear you saying that this isn’t going to make much difference in the long term.  Maybe not in terms of dollars and cents, but the point of this exercise is to train your brain so that savings is a fun thing to do.  So make sure you actually do save the money; don’t just absorb it into your other expenses.
2. Make it easy and automate your savings.
   Ask your employer to allocate a portion of your wages directly to a savings account.  Then, each time you get a wage rise, increase the amount that is going to your savings account. Otherwise set up a regular payment to go out as soon as your pay hits your account.
3. Focus on what you are saving for.
   Rather than thinking that you are depriving yourself by saving (a negative thought), focus on the end goal of your own house to call home! (positive thought).  Have positive visual reminders of what you are saving for, like pictures of the house, neighbourhood, interiors you like.
4. Think more carefully before you spend.
   Take a bit more time and do a bit more research.  Ask yourself if you really need whatever it is that is tempting you, can you find a lower cost version on Marketplace – or do without it altogether.  The difference between what you were originally intending to spend and what you actually spend can go to savings.
5. Have a Plan.
   Know what is coming in and what is going out and what the difference is.  If there is nothing left over or there’s more going out than in, you are going to have to make sacrifices to get on track.  But don’t take a ‘slash and burn’ approach, it just won’t work.  If you don’t know what to do next, find someone to help you.

If you feel you just can’t tighten the belt anymore and the house deposit is looking like an impossibility, there is something else…

Earn more income.

I know, easier said than done, but how about a second job, turning your hobby into something that generates some income, or maybe you could sell some of the ‘stuff’ you no longer want.

If you are feeling stuck on the road to saving for your house deposit, I know where you’re at, I have been there too.