Saving Up For Your First Home

by Guest on November 15, 2012

There will come a time when you wish to say goodbye to rental properties and purchase a home of your own. Indeed, often a mortgage works out cheaper than renting anyway.

The Largest Purchase You Will Ever Make

Saving money for a house is unlike saving for most other things. The amount will usually be larger than for any other goal you have ever tackled, and so the time frame will be much longer. The amount required is notoriously difficult to calculate and the sum of money you need will be much less intimidating if you think of it as a monthly amount rather than a lump sum. The larger the deposit you save, the more flexible the mortgage and the more competitive the interest rates. It is wise to create a graphical tool to motivate your saving, for example, a money thermometer. In the run-up to your purchase, you could free up money by avoiding or at least reducing the cost of renting by moving in with your parents or in-laws or sharing a house with friends.

Where to Put the Money

You should keep the money for a house in an interest-bearing savings account devoted entirely to that purpose where withdrawals are not allowed, to negate temptation. You should pay a fixed amount from your salary into this account. The amount should be as large as you can consistently afford. If this is deducted by your employer, you will once again avoid temptation. Windfalls such as gifts or tax rebates should be paid into this account and not blown.

Sticking to a Budget

You must set a budget and stick to it. You should only make purchases when they are absolutely necessary. Impulse purchases are to be avoided at all costs, and this will save a considerable sum. When you shop, you should compose a list and then stick to it. Shopping at a time when nobody else wants to will save money, for instance well before Christmas. Used items should be purchased where possible. The clothes you choose should be suitable to many combinations. Purchasing on credit cards should be avoided by anybody saving for a house, because you don’t want to waste money on unnecessary interest.

Cutting back on outside entertainment is one of the best ways to save money. You should eat in rather than out. Your life need not be monastic: you could invite friends round.

Where You Can Get Some Money

You can obtain money by selling assets such as old jewellery, clothes or collectibles. You will be pleasantly surprised by what other people will pay for items you don’t need. Less valuable unwanted belongings can be productively disposed of at a car boot sale. You could even organise one yourself if you speak to other families. These measures have the added benefit of leaving you with less material to transport when you purchase a house and move into it.

 

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