How to save for your home deposit
Written by Jess Knaus — mum of a toddler, musician and member of the m3 community/producer of the m3 shows
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I’m not a homeowner yet, but I’d love to be! We’ve been working super hard to be in a position to buy, and I know so many in the m3 community are in the same boat, so I wanted to share what I’ve learnt about effectively saving a home deposit. Tell me what you have done that’s worked as well! We’re all learning together.
Mindset — get your head in the game
This has been so important for me. I was going to have to put in the hard yards and I needed to be ok with that. I’ve been working a few jobs and doing so knowing that this hustle will be worth it. I’m hoping that when we finally do land a home there’ll be a sense of accomplishment knowing we worked really hard for it!
Saving a home deposit can seem really daunting — I know for me it’s felt that way for years. It had become so easy to get stuck in the mindset of it seeming completely unachievable, particularly when you don’t seem to be able to save even $500 at the best of times. For me I found changing my mindset to be really helpful — I changed my language around it to: “I am saving a home deposit, my goal is X amount by X date”. Once I did that I found my actions and momentum changed.
Also, if you’re in a position right now where you’re studying, or having kids, or not working much — that’s totally fine! Getting your head in the game for you might look like setting a goal for when serious savings can start again — set the date where it can begin again. If you’re in a low income phase, focus on staying out of debt as much as you can, maintain great money management skills, and when the time is right to save hard, you’ll be ready! We have gone through phases of having babies and completing study so we set our minds on staying in the black and choosing a future date for when we could press go.
Set your deposit goal & a date
I wasn’t sure how much we could save for a deposit. So I started by figuring out how much we could technically be putting into savings each week/pay cycle, and used that as a guide. I calculated how much we could save in 6 months, 12 months and beyond, and chose our goal from there. Based on that I then set a date that I wanted to have X amount saved (whatever that amount is for you) — so when I checked in on how our savings are growing I could measure it against my goal.
Use a separate bank account to save
This has been so effective. I set up a separate bank account, away from day-to-day spending, to keep money away so there’s no chance it can be spent. I removed the banking app from my phone so I couldn’t transfer anything or see the balance, and ensured there was no debit card I could use to buy stuff with the amount saved there. No temptation! I looked for a high interest savings account option that is so locked away it doesn’t do quick Osko transfers. Lock it away!
Choose a set amount each pay cycle to save + automate it if possible
Automation has been the habit that makes the savings magic happen. If you’re a sole trader like I have been for a good chunk of the time we’ve been saving, put a specific percentage of each gig/project pay into your savings. I would allocate 20% to tax, 10% to super, 10% to “salary”, 40% to savings and the rest to “business expenses”. But choose whatever percentage suits you and your situation. If you’re an employee whose tax and super is paid by your work, then these percentages probs look different for you — maybe you can be saving a bigger percentage each pay cycle. Have a play with your numbers and see what percentage you can be saving.
Talk to a mortgage broker
Honestly one of the best things we’ve done and it’s freeeee. I had a preliminary meeting with a broker just to get a sense for how the whole system worked. When we were about halfway through saving our deposit she ran some of our numbers to see how much we could potentially borrow, and we used that to help us decide our ultimate deposit goal, and the timeframe we wanted to save it in. Throughout our saving time I’ve sent her so many emails with questions — she must love/hate me haha. But checking in with her with update income amounts or deposit level has made the process feel so much more interactive and real.
The seemingly small things matter
Make food at home that’s better than take away — this saves you some serious coin but also be worth it for the taste experience! It’s amazing how quickly you can spend $50 on dinner delivered to your door. You could make 5 cheap dinners for that. We’ve loved getting inspired by some YouTube channels all about food and ways you can cook things — Bon Appetit & Alex French Guy Cooking are my 2 favs.
Cancel subscriptions and random recurring payments you don’t need — if you have 11 movie streaming subscriptions you probs need to cancel some of those! Pick a few — cut it back, even just for a set amount of time.
Replace personal training and gym sessions with homegrown exercise — cut the regular expense and dust off your pushy, utilise all the free training channels on YouTube, do some circuit training in the park with a mate. All free!
Cap your grocery spend each week — it’s so easy to overspend on food (food rocks). Setting a cap on how much you spend on food is so helpful though — some families can feed 2 adults and 3 kids for $150 a week which is pretty amazing! Make meals that can stretch to leftovers for lunch the next day, don’t be afraid of having cheaps meals for dinner (cheese toasties, baked beans yiew!, homemade pizzas, tuna salad, fruit & veg galore), and stick to healthy snacks like the good ol apple.
Cut back on socialising costs — just for a little while. Cut back on drinks at the pub, coffee dates with girlfriends, nights out to the movies. DIY these things at home for a while, and don’t feel bad for saying no to events. It won’t last forever and you can still see peeps without spending $40 here and there.
Cap how much you spend on gifts — I swear there’s birthdays and Christmas every 2 weeks where suddenly you need to buy gifts for people. Set your gift cost ceiling, and keep it consistent across the board for all fam and friends. Even if it’s $20, don’t. spend. more.
Being patient and let time run its course
I am so impatient haha. But letting time run its course has actually been really helpful, as impatient as I am. I need to distract myself sometimes so I don’t sit there looking at the account going “grow already!”. Let your habits ride out their time and things will grow and change.