Top tips for saving for a house

Is buying a house high up on your shopping list for 2023 but not sure how you’re going to fund it when your Powerball numbers still haven’t come up yet? The good news is though, that it is possible and the dream of buying your own home can be a reality sooner than you think. The team at Compare Money have put together their top tips for saving for a big purchase to help you kick off the new year in the right direction.

If you’re someone that avoids budgeting then this might be a lot to process, but knowing where you’re at and what your situation is, is the first step towards that big purchase.

1. Budget and set a savings target

Once you’ve set a goal to buy a house, you need to analyse your own income and spending habits and set yourself a budget – to do this, you need to know:

• How much money is coming in
• Where it’s coming from
• How often it’s coming in

Once you’ve determined this, you can then break down your spending into essential and non-essential categories. We’re most interested in the non-essentials as this can generally be scaled back or adjusted so you can start putting some of that money into savings towards your new home.

2. Set an achievable timeline

The key here is being realistic with how much you think you can save and when you want to make the purchase. There are two simple steps to help you determine a timeframe:

• After analysing your income and spending, calculate how much you can realistically save each pay cycle.
• From there, map out how long it will take you to achieve your savings goal.

It’s important to be realistic when thinking about how much you can save, because the more realistic the target is, the more likely you’ll reach it than if you were to put yourself under financial stress of trying to save more.

3. Set up a dedicated savings account

By having a dedicated savings account that you can transfer your savings straight into, you’re separating your everyday spending account meaning your savings are out of sight and not tempting you to spend. There’s also the added benefit of seeing your savings account slowly increasing so you can track your progress and stay accountable.

Ideally, this savings account will also accrue interest. Interest rates and fees will differ depending on the lender, so shop around to secure a savings account with a good interest rate and suitable fees for your situation.

4. Top up with any bonuses or unexpected wins

If you find that some extra funds come your way, perhaps through a bonus at work, inheritance or birthday cash, put it towards your savings goal. This will not only help you get there sooner, but it can also provide a buffer in case you fall short on your savings goal down the track. Other income streams that might help you reach your goal sooner:

• Casual jobs like babysitting, tutoring or rideshare driving
• Dividends from shares
• Incentive-based bonuses at work
• Cashback offers like those from home loans or insurance

5. Practical sacrifices to help you save faster

It’s always worthwhile analysing where you can sacrifice spending so you can put money towards your goal. Keeping tabs on your spending is a healthy habit, whether you’re saving towards a purchase or not. Check your bank statements to see where you can minimise spending – some costs to cut back on may include:

• Unused streaming services
• Multiple gym or fitness memberships
• Restaurants and bars
• Takeaway
• Online shopping

6. Reward yourself and celebrate the milestones along the way

When saving towards any long-term goal, no matter the size, make sure you’re rewarding yourself along the way. Saving money can be a difficult skill to learn so set small milestones along the way to reinforce and celebrate your progress.

While saving for a house can feel stressful and like a lot of sacrificing, it’s important to keep your eye on the prize by implementing these small changes to achieve a big goal. We know that not all of these tips will appeal to everyone so it’s about making it work for you and your situation… and rewarding yourself along the way!