For the first time in years, the amount needed to save for a deposit is decreasing as housing values across most of Australia decline.
While this sounds like good news if you’re saving for a deposit, cost of living increases means aspiring homeowners may not be able to divert as much money to a deposit without significant lifestyle sacrifices.
Food prices have skyrocketed, as has the price of petrol. Furniture is more expensive, as are clothes, while rents have drastically increased across Australia.i,ii Yet household spending is up, rising 2.2% in the June 2022 quarter.iii
So how can you save for a deposit without losing your lifestyle? Here are some ways you can reach your financial goal while still enjoying life in the present.
Budget for fun
We don’t mean budgeting is necessarily a fun activity (though we’re not judging those who get a kick out of it), but rather that it’s important to create room in your budget for hobbies or small indulgences.
Perhaps it’s for a fancy restaurant meal, that weekend away, a new pair of shoes – whatever it is, set aside a set amount for the nice things in life.
Budgeting for this ahead of time can help prevent a splurge. Just as a restrictive diet can have you heading for the cookie jar, being too strict with your savings can backfire if you feel deprived. Establish a set amount per month allocated to fun to avoid the guilt and stay on track.
Find low-cost entertainment
If you’ve got expensive taste when it comes to entertainment – regular nights out, multiple subscription services, tickets to sporting games and concerts – you may need to pare it back.
That doesn’t mean nights on the couch scrolling Netflix. You just need to think outside the square when it comes to low-cost entertainment.
Going out to dinner with friends can be swapped for cooking for them at home or holding a pot-luck feast. Facebook Marketplace and Gumtree are great for second-hand buys, and you can keep an eye out for discount event tickets in your area.
Fitness-wise you can check to see if there is a parkrun near you; a free 5km community run held each weekend. You can visit an art gallery, museum or botanical gardens for an enjoyable day out for next to nothing.
Source another income stream
While paring back your expenses is often necessary to save, you can also boost your income. Again, think creatively as to how you can earn more money.
Do you have a particular skillset or talent you can monetise? Whether it’s a hobby or a previous profession, you might be able to drum up business with your side hustle.
This will take up more of your time, so be realistic around how much time you can invest – you don’t want to be burning the candle at both ends in your pursuit of growing your savings.
Then there are passive income streams, such as course creation or investing in the share market. While the term ‘passive income’ sounds appealing, it’s not as simple as getting something from nothing. You will still need to invest your time and effort in establishing and/or maintaining this income stream and it might not be an easy ride.
Reframe your thinking and priorities
Of course, another way to save more is to reframe your thinking and be clear on your priorities.
You may have to forgo your daily coffee from the café, but you’ll be a homeowner sooner if you tighten the financial belt. Rather than seeing saving as a sacrifice, remind yourself what it will give you in return.
Saving will pay off in the long-term, so stay motivated by thinking of your end goal. For help staying on track or to discuss your borrowing capacity, feel free to get in touch on Phone (03) 9974 3000.
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