Owning your own home has been the great Australian Dream for many years, yet for many people that is exactly what it is – a dream. Owning your own home or buying an investment property doesn’t have to be impossible, you just have to commit to the decision and make some changes.
You know that quote “Whether you think you can or think you can’t, you’re right”? It is the same thing here. Making changes to your spending habits and saving up for your home requires commitment, takes time and most of all patience. It will feel like it’s not going anywhere, but it is. You just have to believe that you can do this.
Here are a few things you can do to start saving for your dream home.
1. Investigate your spending habits
I hate to call it budgeting, so I’m not, but you have to make some commitments to yourself if buying a home or an investment property is what you want.
First of all look at your current financial situation and your spending habits. Is there more money going out than in? Is there more month than money? Do you have any savings at all? Are you spending money and not knowing where it is actually going?
One of the things I do at least once a year is exporting a statement from my bank for at least the past 4 months and add a category for every charge on the list (it’s not hard, you can search by your favourite coffee place and add “Coffee” after every charge. Half of the list done!). Add up the monthly cost for each category where your money is going and review if you may be spending money where you can save money.
Paying a gym membership but not going? Cancel! (Or go to the gym). For all the savings that you make, put it in your savings accounts.
It can be quite confronting but knowing how much you are actually spending from your income can help you getting your savings plan started. When you see the $700 a month spending on clothing and try to justify it, ask yourself – do you really want that house?!
If you know you are spending more than you are making, cut back until you have savings left over at the end of the month. If you are spending less than your income, cut back as well and save even more! It doesn’t have to be extreme, just cut back a little bit and review it every month and see if there are any other savings to be made.
2. Change banks
For those that haven’t read the Barefoot Investor, I highly recommend it. Even changing banks can make a big difference! Changing to ING bank at the time was the best decision I made as the interest on my savings were 6 times higher than the other bank I was with. Winning!
I also suggest changing the name of your savings account to “My new Home”, “My Dream Home” or “Financial Freedom”. This way you will be reminded every time you put money in that account what it is for and it will make it harder to take money out.
3. Get on top of your debts
‘How can I buy a house if I already have a credit card debt of $10.000?’ It is a question many people ask themselves. Knowing that you already have a debt can be mentally frustrating and you’ll unknowingly procrastinate saving for a house because you think; how can I buy a house if I can’t even pay off my credit card debt”? Getting on top of your debt is so important and not buying anything more on your credit card is even better. Cut up that piece of plastic! Get rid of it and pay off the debt as soon as you can. You’ll be so proud of yourself for not having the credit card debt and you have more confidence buying that dream home.
4. Helping hands
If you have never bought a house before, you may be eligible for the First Home Owner Grant. It is a one-off payment to encourage and assist first home buyers to buy or build a residential property which will be their principal place of residence. Make sure you check the government site for your state if you are eligible and what you need to do.