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10 things you can do to fast-track your home savings

Saving for a house is the Mount Everest of property goals, but like scaling a mountain, building a deposit is about taking a series of small steps.

10 things you can do to fast-track your home savings

20 October 2018

Saving for a house is the Mount Everest of property goals, but like scaling a mountain, building a deposit is about taking a series of small steps.

Glen James, a multi-award winning financial adviser dubbed Australia’s millennial money expert™, says young people still a few years from buying their first home can start small in tackling the mammoth task.

Glen shares his 10 best tips to press ‘accelerate’ on your home savings goals.

1.     Automate savings

Removing the fallible “human element” from saving is crucial, Glen says.

Rather than manually putting money away, Glenn recommends automating the process.

“Set up your banking so on the day of every pay cycle, your savings amount is sent to a separate savings account, so it removes you from the equation. It’s OK to have this with another bank to your regular banking, so you’re not tempted to log in and move money around. Set and forget.”

10 things you can do to fast-track your home savings_Pic1 - dining and kitchen 
Getting into your perfect first home could be just a matter of following some simple steps. Picture:

2.     Audit automatic debits

“When was the last time you looked at all the direct debits coming out of your account?” Glen asks. “With all the subscriptions we sign up for, donations, insurances – do you actually know what you pay for?

“I had a client who was paying $120 a month for credit card insurance, via their credit card. They thought it was the interest repayment. Take stock and pay for only what you need, use or enjoy,” he says. Then, consider deleting the rest.

3.     Clean up, then sell!

“If you have stuff of major or minor value that’s not a family heirloom and you have not used it in two years, put it on Gumtree! Get rid of it,” Glen says.

“It’s amazing how much value some of us have laying around that can be sold, with the cash put to savings. What have you got that needs to go?”

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If you have items around the house that you’re not using, now is the time to turn them into cash. Picture: Getty

4.     Get extra income

“Earning more cash from a second job or side hustle to put towards a deposit is a no-brainer,” Glen says.

“The good thing is while you’re working and earning, you’re not spending. It’s a win-win,” he says.

However, tread with caution. If you’re working late through the week and take up a weekend job – will it be worth it? You’ve got to have some time to yourself.

5.     Set up a spending plan

Rather than a boring budget, Glen suggests an “automated spending plan”.

Work out how much you need each week for entertainment, fuel, groceries, going out and anything else. Set an automatic transfer from your account where your pay goes, into another account. Only carry this card around with you.

“Make sure it’s with another bank and only have this new card’s bank app on your phone. That way, week-on-week, you’re limited on what you spend and don’t need to use your brain when buying stuff. It’s your weekly play money,” Glen says.

6.     Get plastic surgery and out of debt

“It’s pretty simple, if you’ve paid more than 1% of interest on your credit card over the last two months and you still use your card – it’s time to go,” Glen says.

“Plastic surgery. Scalpel please! The fact is you are spending more than you earn. Stop the leak. Also, the debt has to be paid off eventually.

“Do this, if possible, before you save for a deposit. The reason is that for every $10,000 of personal loan or credit card debt, your borrowing capacity may be impacted by up to $40,000!” Glen says.

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It’s time to be brutal when it comes to cutting the plastic addiction. Picture: Getty

7.     Limit rent

The best way to reduce rent is to split the costs with other people. “Yes, this is obvious, but a good rule regardless is to not spend more than 30% of your net take home income (after tax) on rent – 25% is ideal.

“By reducing your rent, you can throw more money into your savings account or your debt reduction strategy,” Glen says.

8.     Ask for a pay rise

“This also may seem obvious, but if you’re working for an employer where there may be some discretion with salaries, why not ask the question?” Glen says.

“Be honest. Say you’re working hard to save for your first home, you love your work and you’d rather stay, as opposed to trying to increase your income in another place of work.

“Remember, it’s not a shakedown, nor should you hold your employer ransom, but if you have not had a pay increase for some time, or you feel the market for your role has moved, why not ask?”

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Asking for a pay rise may be daunting, but it doesn’t have to be awkward. Picture: Getty

9.     Press pause on competing goals

“The house, the holiday, the wedding, the new car, the French bulldog. All of our big wants and dreams usually take some time to save for and mathematically speaking, saving a small bit each pay for each dream at once will feel like you’re treading water,” Glen says.

“It’s OK to want to save $20,000 for a wedding or international trip before you settle down and start your hardcore home savings. Don’t feel you have to do all at once!

“While you’re in the establishment stage of life, try one thing at a time and go for it,” Glen says.

10.     Downgrade your car

“If your car (or cars, if you’re in a couple) is worth more than 50% of your take home annual income (after tax), you have too much car for your income,” Glen says.

“It will be acting like an anchor on your finances.” Downgrade and bank the savings.


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