Small changes in spending can make big impacts when it comes to buying your first home. Whilst thinking about the cost of home ownership can seem overwhelming, there are small, easy steps you can take to make sure you are on the right path when it comes to affording your own home.
Because there are so many awesome budgeting and savings websites- we won’t be going too in-depth on this topic. What we wanted to do was show you basic and easy ways that you can save money and enter the property market more quickly. We will include some useful links at the bottom of this post, to help you in the right direction for further information.
The biggest step you have already taken to entering the housing market, is looking at co-ownership. By reading this blog, you know about, and have hopefully signed up to Mortgage Mates! Whether you are looking to find some one to co-own with, or you are checking your housing options with an existing co-owner, by buying with two or more other people, you are already reducing the cost to build or buy in the current housing market.
In addition to this, by looking at your existing expenditure and making small changes to the things you buy, the way you save and the way you budget, you can put more money towards your own home and less to other, more frivolous (although possibly awesome) things.
In the Daily Mail (31st May), Susie Burrell looks at ways in which you can save when food shopping and this is a prime example of where small changes can make a big impact.
Susie compares two sets of items, which whilst similar in content, vary greatly in price. As an example, instead of buying a 500g punnet of raspberries for $22.00, you can buy a 500g of frozen raspberries for $4.00. You can also swap fresh spinach at $5.00 a pop for frozen spinach for 95c! If you change all the items Susie suggests you would be able to spend $17.20 per week on food instead of $63.00. The total saving in the suggestions made by Ms Burrell means you could have an additional $3000 a year in your own pocket.
Whilst not all savings apply to each person, by saving even $10.00 a week on food you can be $520 a year better off.
Before starting to save for your home, it is worth completing a full budget to look at all the expenditure you currently make, and to highlight any areas where you may be able to make some changes. As an example, do you currently have Foxtel at home? The cost of these TV channels can cost upwards of $120 per month. By swapping this to Netflix you could reduce the cost to as little as $10.00 per month. This saving would be an additional $1300 a year in money towards your home.
Your budget can be completed by yourself, or you can link in with a financial councillor who will walk through your budget with you to make sure its completed correctly. Even small savings can add up over a year- and by making a number of small changes this can add up to big financial benefits.
Again, a $4.00 coffee every work day is $1000 a year! If you and your partner purchase a Take-Away once a week, you could save up to $2600 by reducing it from $100 to $50 per week.
The reason we have developed Mortgage Mates is that we don’t believe you should have to give up all the things you love to be able to own your own home. By co-owning with another buyer, you can spend less than half the amount of your weekly rent on a mortgage. This means that once you have bought a house you can afford to have your daily coffee and the much needed smashed avocado on occasion.
It is important when completing your budget that you be as realistic and honest as you can be. Whilst it may look better on paper to shave $5.00 or $10.00 off each spend, the actual difference this will make to your budget will be significant. It also means any timelines attached to your budget are likely to be unrealistic and for every month you delay buying a property, you risk the property market increasing in value.
Another top tip is to make sure you think about all expenditures associated to a budget line. For example, when you consider transport as a cost, make sure you include both private and public costs, as well as additional, one off costs that may need to be included in the calculation (you may only pay your car registration six monthly but the cost will need to be included in your weekly or monthly budget).
The included diagrams are free for you to download and include as part of your budgeting journey. There are some fantastic apps which you can use to help manage your money and once you have made the savings that work for you- you will be one step closer to owning your own home.
Below are some useful links to start your savings journey.
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