How to save for a house in 5 years (part I)
Does logging into your banking app put you in a cold sweat? Do you feel like it’s impossible to get ahead? You’re not alone. If you want to know how to save for a house in five years, I can help.
We’ve all grown up on the idea that investing in a home is priority #1 when it comes to securing a strong financial future. But if you’re like most of my clients (and me, back in the day) you know how hard it is. You earn great money. You try to keep a lid on your spending. But somehow you still end up living paycheck to paycheck.
You CAN do this!
If you want to get your shit together financially — and save for a house — something’s got to change. The good news is there are stacks of ways you can free yourself from financial stress and start accumulating savings. So many, in fact, I’ve made this a two-part series.
Here’s part one of my 10 foolproof strategies to help you save for a house in five years.
1. How to save for a house: have a cash flow plan
While it may seem obvious, you need to spend less than you earn. But this is where most people fall down. When you operate in deficit (which means that you’re spending more than you earn) you’re either living on credit or eating into your savings. Both of which are bad for business when you’re trying to save for a house.
The best way to avoid this is a clear, achievable budget and cash flow plan. Here’s what you need to get started:
A simple spreadsheet that plans and tracks your spending against your income
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Clear savings goals — articulated on said spreadsheet
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Detailed entries to keep track of what you spend vs. what you earn
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A high-interest savings account that rewards you when you don’t withdraw — ideally with a different bank to prevent easy transferring back out of the account
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An automatic, recurring transfer from your main account to your savings account
And if the word the budget sends chills down your spine, substitute it with the phrase ‘money plan’. Or ‘money map’. Language tweaks can do wonders to shift money blocks.
2. How to save for a house: needs vs wants
To really reduce your expenses, you’ve gotta separate your needs from your wants. After that? Be brutal. Aim to cut 10-15% of the wants from your life.
If shiny new white runners bring you joy, by all means, add to cart. But ask yourself this: “Will those shoes bring me more joy than owning my own home?”.
3. How to save for a house strategy: rebates & grants
Show me the money! No longer just a catchphrase from a 1990s classic — you need to make this your motto. Keep it in mind as you research every possible grant, rebate, subsidy, or scheme for home buyers.
There are dozens of options out there, and you’ll be doing Future You a huge favour by taking advantage of them. Check out these national offers:
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New Home Guarantee (valid until 30 June 2022)
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Family Home Guarantee for Single Parents
But wait, there’s more. Canstar has a brilliant resource to help you easily locate state-based offers.
4. How to save for a house: get a side hustle
The phrase ‘side hustle’ is borderline ubiquitous, particularly among millennials wanting to accelerate their savings. And with good reason. It’s a damn sensible way to reach your savings goals faster.
The number one benefit of a side hustle? All income can (and should) go straight into your savings. As long as you’re already living in surplus, side hustle income is bonus income — which will help fast-track your savings.
Need some side hustle inspo? Want ideas that are easy to implement? Consider babysitting, becoming an online tutor or dog walking. House sitting is another winner. Living in other people’s homes is a great way to test-drive different neighbourhoods and home design styles.
Keen to learn more? Here’s a list of 50 side hustle ideas. Instead of flicking through Facebook 5 x per day - what not use spare downtime and complete a few paid surveys? My favourite is Octopus Group - a few surveys help pay for my love of coffee!
5. How to save for a house: repair credit damage
Remember that $3000 TV you put on Zip Pay at Harvey Norman three years ago? And the root canal you had done last year? If it wasn’t for Open Pay, it would have been at least three months of nasty gum pain.
“But I’ve already paid those off! And I never used them again!”
I hear you. But guess what? Even if you’ve paid them off, they remain on your credit file for up to five years. Those shiny beacons of instant gratification? Pffft. More like conniving thieves of future joy.
You want to maximise your chances of being approved for a home loan, right? Close down all buy now, pay later accounts. Every. Single. One.
How to save for a house in 5 years and not sacrifice everything you love
It IS possible to accumulate enough savings to buy a house in five years. If you start doing these things now, you can get there without sacrificing the things you love.
Ready to crack on with more foolproof strategies? Here’s the next five.
Still feeling those budget chills? Want someone to help you unf*ck your finances while still doing the things you love?
Check out my values-based budget planning service.
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