The difference between renting and owning a home is a major one. While the responsibilities associated with homeownership are considerable, for most people, the benefits probably more than outweigh the responsibilities. If you’re looking to get away from rental accommodation, you’ll need to save up for a deposit and make sure you can meet the minimum mortgage repayments.
Owning Your Own Home
The dream of owning one’s own home is probably on just about everyone’s list of goals. Most people finance their home purchase with a mortgage. If you want to know how much you can borrow, you can start off by using a homeloan calculatorto estimate what you might need for a deposit and for ongoing repayments.
If you’re renting at the moment, the dream of owning your own home could be motivated by the desire to have more flexibility and to enjoy the benefits of homeownership.
Owning your own home means you can undertake renovations or make other major changes, and what’s more, you’re free from regular housing inspections and the prospect of periodic rent hikes.
Successful Savings Strategies
Successful savings strategies are usually made up of many incremental steps or habits. Here are some to get you started, although you’ll probably add a few more tricks to the list as you move closer to the goal of owning your own home.
1. Identify Where You Can Cut Costs
Take time to consider how you’re spending your money by drawing up a budget,and write down the items you can cut back on. There will be two major categories: a) items you can forgo, and b)lifestyle and other changes you can make to reduce spending.
Common examples include cutting back on alcohol and other luxuries, reviewing major expense items (such as your energy contract) and switching electrical companies. You could also shift to a cheaper rental as you save for your deposit.
Major household items include:
- Heating and cooling –Your heating and cooling energy costs can range in the thousands every year, depending on the climate in your area. Rug up, insulate your home or use energy-efficient heating and cooling options.
- Car –Cars can cost thousands to run and maintain every year. Review how you’re using your car and think of ways you can cut on petrol and maintenance.
- Phone line –The traditional landline phone can cost hundreds to maintain each year. If you have an Internet connection, switching to cheaper options such as VoIP could be a sensible move.
2. Small Savings
Don’t discount the smaller, everyday savings you can make in your life.
- Daily coffee –Your daily coffee or bottled water from the café can cost you over $900 per year (based on a $3.50 cup of coffee every weekday).
- Lunch –A $10 lunch every workday adds up to $2,600 each year.
- Weekly takeaway –A $40 weekly takeaway for two people amounts to over $2,000 per year.
Simply reviewing and abstaining from the small daily luxuries can save you thousands of dollars each year. Rethinking smaller items could have you realising your goal much sooner than you thought, and this is especially true if you’re saving with your partner.