The Post Office recently conducted some research showing that the average first-time buyer spends four years living a leaner lifestyle in order to reach their goals of owning their own home.
Us millennials sure are an impatient bunch as research showed, we would rather make sacrifices to our lifestyle rather than compromise our property expectations OR the amount of time it will take to save a deposit. Makes total sense to me as that is exactly what I did so I thought I would share some top tips on how I stayed on track with my money to afford my first home.
Where to start?
Many people think that you should start saving first and keep your eyes blinkered from all properties until the big day when you have enough money to start the process. I disagree!
There is nothing wrong with window shopping, in fact, it can be a great thing. Window shopping allows you to get a good idea of what you actually want from a property. How many bedrooms, parking requirements and garden size etc. It will also give you a rough idea of what you’ll need to spend which therefore gives you a good idea of where to start with a deposit.
You’ll then need to start a deposit goal. The Post Office has launched a new online tool, allowing new buyers to map out their deposit plans based specifically on property affordability in their chosen area!
It makes planning your money really easy and breaks down the sense of overwhelm you can get when you’re not sure where to start.
Here are some top tips on making cutbacks:
- Ditch the takeaways/store bought food! In the first few weeks of having Elin, we ordered a LOT of takeaway and it really shocked me how quickly that added up. Even before I had kids and worked full time, I would often get lunch from the canteen and, although it was really reasonably priced food, it adds up. £2.50 a day is £12.50 a week. That’s £50 a month that could be nicely nestled away in your savings account. It averages around 60% cheaper to make your own food from scratch so its a great ‘quick win’
- Look into where you are spending your money and then look into how. So for example, most people tell you to go through your bank statements/receipts to get a good idea of where you spend your money i.e is it on clothes, food, leisure, hobbies etc. Once you have a good idea of that, break it down one step further. i.e. if you spend 30% of your money on groceries, are their any tweaks you could make to save or make your money go further? Could you swap branded products with supermarket basics (a really good place to start is with cleaning products FYI), could you look into your non-essential bills? Could you reduce your phone or internet bill etc? Most companies are pretty helpful with this if you can put the time in to call them.
- Could you make some lifestyle changes? When Emma saved for her deposit she moved out of her rented flat and in with her in-laws. She saved hard for 16 months and cut out a lot of nights out, takeaways, unnecessary expenses to put every spare penny in her savings account. Although it was tough, she’s now been in her home for seven years and has two children. She isn’t alone! 1 in 5 first time buyers move house in order to achieve their goals (13% moved back in with parents and 9% downsized their existing home)
Can you increase your income?
84% of first-time buyers also looked at ways to increase their income. There are actually way more ways to do this than you would think, depending on how much time you want to put in. They could be really simple ways such as:
- Use sites like Topcashback for your normal purchases and create some long-term savings which you can’t get your hands on straight away! (Shared by Rachel from The Illustrated Teacup) – its also a great habit to get into using cashback sites as when you come to move home, they offer great cashback deals on utility providors, home insurance and entertainment purchases as well as most furniture companies offering cash back on purchases you were making anyway.
- Having a good clear out! Cull your unwanted belongings and sell them on sites like Gumtree, eBay or Facebook Buy & Sell.
- Do your research! There are so many great free resources and blogs (this one is the most comprehensive) with great ways to make money if you are willing to invest some extra time.
How to stay motivated:
- The long-term goal is better than the short-term gain. When you hear the lure of a takeaway or a brand new outfit is calling your name through the shop window, remind yourself of the long-term gain. Say to yourself “will I remember these french fries when I am signing the contract for my new home?” Chances are, no french fries are that good. Your long-term goal will mean more to you. ‘Quick splurges’ never last long and usually have an element of guilt attached to them when we have a bigger vision for our finances. Try to remember that your long-term goal is more important than short-term gains.
- Have an accountability buddy. Most people are investing into their first property with a partner. Keep each other accountable. Motivate each other. You’ll be less likely to fall off the wagon if you have someone counting on you! If you’ve decided to buy alone then ask someone whose really good at saving (usually a parent or grandparent) to hold you accountable. Tell them the goals you’ve worked out with the Post Office Calculator and get them to check in on you!
- Window shop. Consider this market research! As a first time buyer it’s hard to know what you may actually want from a property, so picking up the details and having a look round isn’t a bad idea. It’s also a huge motivator to keep you on track with your end goal.
- Start a Pinterest board. Creating Pinterest boards is a great way to stay on track with your goals! Not only will it help you stay motivated, it will give you something to do when you’re frustrated that you don’t have money to go out etc. It will also help you get a good idea of what you want/don’t want when it comes to buying your property!
- Cut yourself some slack. Going cold turkey on anything is a sure fire way to create resentment and also to end up quitting! If you set aside a certain budget per month to still do things that you like, you will be more likely to stay motivated with your saving and if you have a set budget you’re also less likely to frivolously spend on something as you know it’s part of your budget!
*Thank you to The Post Office for sponsoring this post