How to save for your first home on single income
There’s no point sugar-coating the reality that home ownership is becoming tougher in Australia – it’s worse for borrowers in single income households who are trying to save enough home deposit in order to buy a place to call home.
Just because you’re single borrower or joint borrower in a single income family doesn’t mean you’ll never be able to save enough to buy a home. It can be done. It’s a matter of choice. Whether you are saving a home deposit or losing weight, success comes from having a plan and making choices that back it up.
Lead time
The time it takes to save a deposit will obviously be influenced by your income and the type of property you want to buy. I recommend setting goals two to five years out. If going without an annual holiday away overseas (remember those days), for example, is a sacrifice you can’t entertain, then accept that it will take you longer to be cashed up for the property market.
Be realistic
Far too many first home buyers want a “palace” rather than something smaller and more affordable and take on a massive mortgage as a result. Do you really need four bedrooms, three bathrooms, a multimedia room and a pool when a three-bedroom two-bathroom townhouse may meet your needs for now? Remember, this doesn’t have to be our forever home.
State and federal offers
It’s worth finding out if your state or territory government has any deposit grants or stamp duty waiver programs on offer for first home buyers.
While there may be some restrictions, like, grants only available for new builds. It’s wise to check with your state revenues department what benefits are on offer and what eligibility criteria apply.
Save and live
A realistic spending and investment plan are an essential part of your financial house’s foundations (along with insurances, superannuation, estate planning and an emergency fund).
Your spending and investment plan will determine your home deposit savings. Accept that there are everyday living expenses that you can’t get away from – like basic groceries, electricity, phone, rent – and you still need to live, not simply exist.
Discretionary spending is where choice really comes into play. Some suggestions include:
Move in with family temporarily (but still pay your parents some board).
Use public transport or car pool.
If you smoke, stop. Cigarettes are expensive and smoking’s not good for your health anyway.
Never grocery shop when hungry. You are more likely to impulse buy. An extra $20 a week is about $1,000 a year.
Eat last night’s leftovers for lunch instead of buying.
Insure your biggest asset. You – not the home you want to purchase – are your biggest asset. Protect your earning potential (and your investments) by seeking advice about appropriate personal insurances.
Are you willing to make a sacrifice in some other areas to attain what could be the most important asset of your life?
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This article via Smart Property Investment does not constitute advice; readers should seek independent and personalised counsel from a trusted adviser that specialises in property, a tax accountant and property design specialist.