Buying a house can feel like a million miles away when you have nothing in your savings account. Trust me, I’ve been there. However, with some hard work and determination, saving for a house deposit is certainly not out of reach.
If you’re sat at home wondering how you can get started, then please read these top tips, which will enable you to ‘build’ your funds in no time.
1. Have a goal
This first step is an easy one. You want to buy your first home (or perhaps an investment property such as a buy to let). Write your goal down and break it into manageable chunks. What do you hope to have achieved in a month, three months, six months, a year and so on? It’s so much easier to progress towards an objective when it feels less like the top of a very steep mountain.
For the creative ones out there, you could also put together a vision board, with images of your ideal home and all the aspirations you have for the interiors etc. You can then place it in a location likely to motivate you, such as the front of the fridge in the kitchen, or on your desk at home or work. A clear idea of what you’re working towards will help when you’re making small financial sacrifices or thinking about dipping into those hard-earned savings.
2. Remember to bank transfer on payday
Figure out how much of your income you wish to save per month and remove this from your bank account as soon as possible. One option is to set up a direct debit meaning that the money comes out of your account on a specified date without the need to lift a finger. This prevents any big splurges at the beginning of the month, as well as removing temptation to dip into this amount, if it’s left in your bank account until the end of the month.
If you struggle to leave your savings untouched, a solution could be setting up a savings account with another provider, so that you cannot see this within your main banking app or transfer between accounts as easily. This may stop your growing savings from shouting out at you to be spent on clothes or eating out!
3. Create a budget
Sade at the Penny Pal has a fantastic spreadsheet available for download to help you keep track of all your spending. For me personally, this has been such a useful tool, highlighting bad behaviours, while also making sure I’m accountable for my outgoings. There is also a pre-populated formula, which enables you to work out how much you can save over the course of the year, based on how much you’re planning to put into savings each month.
It’s really useful to look back at your budget at least once a month to determine any lessons that can be learnt. A top tip from me is to download the Google Sheets app on your phone so that you can track transactions while on the go. It may seem like a pain to start with, but once it becomes a habit, you will learn so much and feel more in control.
4. Use savings apps
There are a number of lifesaving apps available to assist you in managing your money and savings. My ultimate favourite is Plum, which uses an algorithm to take small savings payments from your main account, when it recognises that you can spare them. There is also the option to round up any payments that you make, which is great for adding more to the pot! I find that I can often save an additional £100 a month with Plum and I often don’t even notice the money disappearing from my account as the amounts are little and often!
Yolt is a super app for those that like to be organised with their outgoings. It monitors what is leaving your bank account and allows you to categorise the payments. This is especially useful for highlighting where you spend the most money, whether that’s shopping, eating out, holidays or leisure! It also alerts you when direct debits are due to come out of your account and when you have less than 10% of your income remaining.
5. Reduce your outgoings
Once you have introduced a budget tracker, you will clearly see where your money is being ‘wasted’ or misspent. For example, are you a member of the gym but haven’t visited in over three months? Or, do you have a Netflix login but the only person making use of it is your ex-partner? These are both savings you want to make pronto! Cancel any unused subscriptions and put that now spare cash straight into your savings account.
You could also make amendments to your outgoings. For example, is your car finance up for renewal? Insurance, mobile phone contracts, and TV package etc can all be negotiated at a better price when you come to the end of your agreement. Money Saving Expert has a whole host of excellent tips for when you call the customer retainment teams. Make them work harder for your hard earned cash!
6. Use cashback websites
When my friend told me about cashback websites I found it hard to believe, as it just seemed too good to be true. However, after joining a site and being a member for over three years, I can confirm that they do just what they say on the tin! Topcashback and Quidco are two I can highly recommend. To this date, I have claimed over £800 from a variety of retailers, including Topshop, ASOS, Boots, TUI… the list goes on!
All you have to do is make sure you visit the website and use it similarly to a search engine before making a purchase. Simply search the store you want to buy from on the website, click through, and purchase as normal. It just sounds too easy doesn’t it? But it works! They also often share discount codes to use to help you save even more money.
7. Try a few ‘no spend’ days or weekends
You may be thinking ‘that’s impossible!’ but I promise you it can be done. Are you a sucker for a Starbucks? If so, why not take a hot flask to your local park. Are your friends suggesting a big night out? Invite them over for cocktails and use up old spirits in the cupboard (after lockdown!).
Sometimes we need to make sacrifices to meet our goals. When attempting a ‘no spend weekend’ make sure to consult your vision board, as this will help you to resist any temptations. Create meal plans, re-shop your wardrobe, and walk where possible to make cutting costs easier. As they say, “fail to prepare, and you prepare to fail”.
8. Start a ‘side hustle’
This is becoming a growing trend, with data from a Hiscox survey suggesting that the annual income from the average side hustle is a whopping £6,605! I’m sure each and every one of you has a desirable skill that will be useful to others so why not channel that into creating extra funds for yourself?
Perhaps you’re crafty and can make stylish prints or knit funky throws! Or maybe you’re a pro at social media and can help small local businesses improve their strategies? Monetise your skills and add to those savings! There are also a number of other ways to increase your earnings, such as taking part in online surveys or creating a blog on your favourite subject and adding advertising platforms.
9. Sell old items
Do you have a lot of unused stuff? I’m talking clothes, books, household items etc. If so, then why not try selling these items on a site such as eBay, Vinted, Depop, Gumtree or even Facebook Marketplace. It’s amazing what you can shift when you start listing your things. Not only that, a cleanse of your belongings is good for the soul, and it means you’ll have even less to take with you when you move home!
You could even try upcycling some of your old furniture to make the pieces even more appealing to buyers. However, this comes with a warning as you may end up falling back in love with it, and deciding to keep the item for yourself!
10. Don’t go too hard!
Please make sure that you’re not too strict as you will be more likely to ‘fall off the wagon’. I’d recommend not saving all of your spare cash, as more often than not it is not manageable, and you will not stick to it.
If you want to buy yourself a ‘nice top’ or fish and chips on a Friday night, then please allow yourself some treats, but also make sure you know when to stop. A full ASOS basket or a Pret lunch every day will not help you reach your house deposit savings goals.
11. Reduce temptation
Now that you’ve introduced a budget into your life, you’ll soon see where you your ‘little devil’ crops up and encourages you to be spendy! Buying clothes is my vice, so I try to avoid organising any shopping trips, or popping into town on my lunch break.
A solution that really worked for me was unsubscribing from any marketing emails so there were no special offers dropping into my inbox! As Kae from Pennies to Pounds always says, “Buying something at a discount that you had no intention buying in the first place isn’t a bargain, just an unnecessary purchase”. It hurts…but it is so true!
Hopefully the 11 tips in this post have made you feel more motivated than ever and you’re ready to begin saving for your house deposit. If you have any questions, or any additional tips to add to this list, then please let me know in the comments below.
I wish you the best of luck and would love to hear any success stories!