For many young people buying your own home seems like an impossible task. Faced with huge student debts, low paying entry-level jobs or internships and continually soaring house prices property can be a daunting prospect. However, with careful money management it is possible to save up to place a deposit down and begin your first steps onto the property ladder. However, before you even think about saving, you’ll need to ensure that your current finances are in order and pay off any existing debts. Our team at Loan Pig have come up with some top tips for saving up for your first home.
Work Out Your Budget
Knowing exactly how much you currently spend each month is a good place to start, whether it’s on rent, bills, transport or food- add it all up. Remember to include the hidden expenses such as entertainment and phone bills. Next, you need to work out how much money you have left once these essential costs have been removed from the equation. Use this figure to establish how much you can afford to set aside for savings.
Find A Savings Account
If you have decided to transfer your future house fund into a savings account, then it can be worth researching accounts which have the best interest rates available. This is a good idea if you know you are going to be saving for several years, as some accounts offer good interest rates but tie up your money for a certain period of time. It is possible to research the best type of savings account online.
Set Up A Standing Order
Once you’ve worked out exactly how much you can afford to save, it’s a good idea to transfer your money into a savings account so you aren’t tempted to dip into it whenever money is short at the end of the month. Of course, in an emergency you may need to use your savings but the idea is not to make this a regular habit. Setting up a standing order will transfer your money directly every month, so you don’t even have to think about it. Standing orders should be free to set up.
Cut Down On Expenses
Look for ways you can cut down on your everyday expenses. Perhaps you have a habit of shopping in your lunch breaks, or maybe you spend a lot of money buying food every day when you could make it at home in bulk. Commit yourself to making small lifestyle changes because these can make a significant impact on your savings over a long period of time.
Don’t Forget About Extra Costs
It’s easy to get fixated on saving towards your deposit but remember that buying a property usually comes with extra fees. When you’re getting near your target amount, try and do some research into the additional costs you might encounter, such as property inspection and solicitor fees, to make sure you definitely have enough to get started.