In our last article we talked about the first steps you should consider taking once you’re ready to start working towards your first house purchase. The key is – saving, which for many of us is much easier said than done. However it’s a great way to get started on the journey to home ownership and general “adulting”. Identifying what needs are essential and those that are non-essential is probably the first step in preparing and setting a realistic savings goal for yourself.
Reduce your monthly outgoings
Reducing your monthly expenditure and where possible getting rid completely of any non-essential spending plays an important role when you are saving for a property. Thankfully, some digital banks make this easy for you, with apps that monitor your daily expenditure and show you exactly where your money goes each month. Opening an online bank account with this type of feature might be useful if you really struggle to keep tabs on your monthly spend.
Work backwards
Looking at the full picture brings a level of clarity that might be difficult to see at the beginning of your journey. Figure out how much money you would need to put down a healthy deposit on your new home and work backwards from this by working out how much you would be able to save each month to reach that goal.
For some, another effective way of doing this is to simply calculate the minimum amount you need in order to live a relatively basic life and everything outside those costs is then put into a separate savings account. This does not mean living on canned food and drinking tap water every day, but it does mean you might have to miss out on a few boozy nights out with your pals.
Plan your monthly budget
Budgeting is a great tool to add to an already up and running savings plan because it fits most methods of saving. It doesn’t require you to live minimally and you can still allocate funds for personal hobbies or leisure without overspending, whilst saving a reasonable portion of your monthly income - depending on your existing financial commitments.
Some digital banks offer different ways for you to budget in a way that suits you. For example, you can set up a variety of savings pots for things like ‘Eating Out’ or ‘Presents’ and you can choose to deposit a set amount into each savings pot each month or as and when you like. If that’s too fiddly for you, some banks also have a feature that allows you to simply set up a monthly payment that is set aside automatically once your pay comes in and placed into a separate savings pot.
If you want to keep things simple, you can cap your spending by depositing only the amount you need into your account or a separate current account, so that once all essential needs are met and the funds used up, you aren’t able to spend outside of your budgeted allowance.
Increase your income
As any financially savvy guru will tell you, saving is great but introducing various sources of income to the mix can be a serious recipe for success.
Now, we don’t mean just going out to apply for jobs that offer 30k more than your current salary (though if you are qualified for the roles then why not!), but there are simpler ways of doing this relatively quickly and all from the comfort of your own home.
Invest in yourself
If increasing your income is a route you seriously want to consider going down, it’s worth thinking about your value as an employee and what you have to offer to a business. Start by identifying your strengths and skills and consider how they can be applied in the workplace. Or perhaps you would benefit from a specialist course designed for individuals working towards a specific career, which could be just the thing you need to secure a higher paying job.
Online Marketplaces
The quickest way to get going is to start off by sorting through all the clothes you’ve worn, loved, never worn and will never wear, and putting these up for sale via an online marketplace. Many buyers are in search of vintage clothing, cameras, bags and jewellery so have a look in your cupboards for items you think might be valuable to someone else. There are always valuable bits and pieces hanging around our bedrooms that we no longer have a need for so why not make the most of it by making a little money back on them and selling them on to people who can love them as you once did?
Paid Surveys
Companies want to know what consumers think so they will often pay survey sites to collect information for them. These survey sites usually pay consumers a portion of the commission they get to answer the surveys and then the information derived from the surveys is sent to the companies. There are several reputable survey sites to choose from which offer great returns for just a few minutes of your time!
Ultimately, if you can increase your sources of income, and continuously employ effective saving and budgeting strategies, you should be able to save more - assuming your standard of living does not also increase.
Summary
Implementing the above strategies daily, monthly and yearly can make a big impact on how much you are able to save towards your first home. Most importantly though, the above tips are all key components of becoming more financially responsible and preparing you for a brighter financial future.
Even the best savers can find themselves in a difficult position when an unpredicted financial situation arises. Perhaps an unexpected bill has arrived through the letterbox, or your car needs some urgent work… We offer same day loans to assist you in a sudden time of need. Just remember that you should only apply for a loan if you really need it, and if you know you can afford your repayments as failing to make your loan repayments on time can cause you serious money problems.
