4 Tips To Budget For A First Home
Learning how to plan, maintain and stick to a budget is one of the most important pillars of financial health and is crucial when it comes to saving for your first home. A budget allows you to closely look and understand cash flow and keeps you accountable for your spending habits so you can reach your savings goal. Below are some tips on helping you budget effectively for your first home.
1. Set Small Milestones
Focusing on shorter time frames helps you reach your financial goals easier. If you’re goal is to save $10,000 for a home deposit, break it down into smaller milestones. Focus on saving $1,000 in a month, and then $200 in a week.
By breaking your goal down into smaller pieces, the day to day actions you need to take become clearer and the overall goal seems more achievable. Don’t forget to take into account your loan repayments when determining your savings goals.
2. Keep Track of Your Spending
Reduce your expenditure by setting a daily or weekly spending limit and sticking to it!! There are some great budgeting apps like Pocketbook or TrackMySPEND by ASIC and most financial institutions have apps which may have spending tracking tools, which can help you keep track of your expenses so you can find specific areas in your life where you can save.
3. Reduce Expensive Habits
Most of us have certain activities or daily habits which if we eliminated or limited could make a big difference towards your savings for a first home over time. For example, you could:
- Take public transport, ride your bike or walk instead of driving or getting an Uber or Taxi whenever you have the opportunity.
- Cancel one or several subscriptions (e.g. Spotify, Netflix, Stan and Disney Plus), especially if you don’t use them often.
- Make your lunch – many people spend $15-20 per day on buying lunch out which equates to $100 per week. Making extra for dinner or fresh salads for lunch most days will save you a significant amount fast!!
- Cut down or give up alcohol, which does wonders for your health as well as help you save money.
- Invite friends and family over for dinner instead of going out to a restaurant to catch up, invite each guest to bring something or make it a reciprocal so you go to their place next and that way you catching up often, but spending big money going out.
As these last points indicate, smart food or healthy choices are a great source of savings. Grow fruit and veggies in your backyard if you can. Learn how to cook delicious, varied meals from staple ingredients. You can still go out for lunch or dinner on occasion, just look for places with good value meal deals or great specials.
4. Organise Your Bank Accounts
Use three bank accounts —
- one for spending
- one for savings
- one for bills
Your income most likely lands in your everyday spending account linked to your debit card. You should move everything you need to pay bills and rent for the month when you get paid. Split the remaining balance between your savings and spending. To do this effectively, you need a budget, so you know exactly how much you need for your expenses during each pay period.
Get in Touch With McDonald Jones Homes
If you’ve saved for your first home and are interested in finding out your finance options or want to discuss building a new home, get in touch with McDonald Jones Homes. When you build with us you have access to our exclusive in-house finance team at MyChoice Homes Loans who are an approved lender for the Australian Government's First Home Loan Deposit Scheme (FHLDS). MyChoice Homes Loans are construction loan specialists and are determined to assist First Home Buyers achieve their dream of new home ownership.
Read more about the First Home Loan Deposit Scheme here.