A financial planner's guide to saving for a house
Buying your First home
It’s one thing to say you’re going to save for a house, but it’s a whole different ball game to actually do it.
#1 Review your spending for the last 6-12 months
Go through your bank and credit card statements and look at where cuts can be made. Draw up a workable budget broken down into essential and non-essential spending.
#2 Set up a cash management system
Have all of your income paid into an interest-bearing savings account or loan offset account. From here pay yourself a regular amount each pay period into an ‘everyday account’. This separates your savings from your expenditure.
#3 Have a float to cover fluctuations
Your ‘everyday account’ should have a float in it of, say $1,000, so that you can manage the occasional fluctuation in expenditure.
#4 Take out a set amount of cash each week
Cash expenditure can be hard to track, so take only a set amount out each week and put all other expenditure on Eftpos or credit card so they can be tracked. All Eftpos and credit card expenditure should also be paid out of the everyday account.
#5 Continue to refine your budget and adjust your regular payment accordingly
The control parameters are an important part of proactively managing your savings and expenditure. If you allow too much flexibility than your savings can be eroded away.
#6 Budget based on your pay cycle
Ie. If you’re paid monthly, budget monthly.
#7 Look at a lot of properties and get a feel of the area and price
Some areas are much better value than others. The more properties you look at while you are saving for your deposit the better. If you set yourself a two year time frame to save for a deposit, you’ll find that if you have looked at enough properties then you will be ready to move quickly once you have reached your savings goal.
#8 Work out the loan repayments that you are able to commit to based on your budget
As interest rates are extremely low at the moment, it is important to leave some room in your budget for interest rate increases. Banks will assess you based on an interest rate of 7.5 per cent to 8 per cent to allow for these interest rate rises.
#9 Be proactive!
Set a budget, set a savings goal, and continually manage the budget.
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