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Best tips on saving for a deposit(18 Posts)
I'm a single person, wanting to save to buy a home. I'm a hotel reservationist but changing jobs into disability support work so have a modest but dependable income. I'm 22 and currently living with my parents and I have no children. I pay my mum £100 a month for keep, Car Insurance, tax and petrol and my phone. I have no debt and one credit card which I don't use. These are all my essential outgoings.
I'm only wanting something small no more than £80,000. From what I can see on the market in my area, this is completely realistic with there being some great properties going for between 60,000 and 70,000 which would be ideal. My question is just if anyone has any good tips for saving for a deposit. I want to put down at least 10% so £8000 if I was to go to the top end of my budget. Also any home buying tips or wisdom especially If you've bought on your own.
I hope this hasn't been too much information.
You also need to function in saving for fees etc that come with buying.
You should have no stamp duty at that level but another 1k at least for fees
What is your monthly take home and monthly out goings
Open one of the help to buy isa's as once you save £8k, you'll get a £2k bonus so will get there faster.
Would you be able to make some extra money? A second job etc?
When I was trying to save £4K, I found it really helpful to break it down into smaller chunks and tried to think of 100 ways to make £40. So for example, doing a carboot, buying and selling on eBay, shifts in a local pub, babysitting. Plus any "bonus" or unexpected money, for example from relatives for birthdays etc. Then for each £40 raised, I'd tick one box off my list.
It's really motivating seeing even small amounts contributing towards your end goal. Good luck
Loveslipstick - Yeah I'm deffo going to open one but I'm waiting for the new financial year because as I understand it if you've been paying into another ISA in the current financial year (which I have) you can't open a help to buy. Feel free to correct me if I'm wrong
whereiscaroline - I'm hoping to have an additional summer job that will be 16 hours a week and is quite good pay and my plan it to not touch any of it. I don't real have anything to sell. I'm quite a minimal person that way if you know what I mean.
Dietstartsmonday- Yeah I have thought about that. Luckily I don't have a set goal date or anything to buy it's just I'm thinking and planning about it. I'm not sure about income and outgoings specifically. I have an obsessive personality so I'm trying to not go mental with the monitoring. I won't be buying for at least 2 years because I graduate next year and I wouldn't be able to run a home on my current income. I have a graduate job already set in stone that will pay a lot more so at the minute I'm just trying to be mindful and put away as much as possible as efficiently as possible
The new Lifetime ISA is coming in April. It'd be perfect for you. You can save up to 4K per year and the government will top it up with 25% extra - so up to 1k per year as a present from he government. The money can then be used either for a deposit if you're a first time buyer or for retirement. You could open one as soon as it becomes available and set up direct debit.
jojo - were can I find more information about this? that sounds perfect.
Just have a google. Individual banks might not advertise them yet as they will only come in in 2 months' time - it's a brand new scheme. You'll only be able to put money into a LISA in the new tax year.
Well done on not having any debt! I would start looking at every current outgoing expense and make sure they are as low as possible. For example with your car insurance - can you get a better deal at another insurer, or can you pay in one lump sum for the year and it's cheaper then paying monthly? Once you have made sure your monthly outgoings are as low as possible. put aside a weekly amount for spending and stick to it. If you really want something but ran out of spending for that week, wait until the next week (by then you might find you don't want it anymore!). Do you get charged a monthly or yearly fee for your credit card? If so, cancel it. Hope this helps
Thanks for the reply . I think my outgoings are pretty good. My car insurance was the cheapest I could find and paid in a lump sum (just passed my test so is still quite high). My credit card has no fee. I buy my fuel on it and pay it when I get home to build my credit score lol.
I have just got my deposit together and here are the things I did to do it.
Made sure expenses were as low as physically possible. I know how much my monthly direct debits come to, to the penny.
No pricy mobile contract, just a sim only deal with my exisiting handset.
Be mindful with petrol or travel costs, minimise these by walking as much as poss.
Babysitting regularly every other week on a Sunday, did this for a year.
Having a second job. Mine is a bar job and I save everything I earn from this. It also helps for mortgage application for your affordability so they are more likely to lend to you the higher your income is.
Gave up drinking for a whole year. For me, it wasn't so much the money I spent on alcohol but related costs! Ie taxis/bus fare/take away/drunked uninhibited spending haha! I eliminated all that and it boosted my monthly savings as much as my second job.
Hi Leatherbound. Well done on getting your deposit together!
I hadn't really thought about alcohol. I don't drink that often but when I do its go big or go home lol might try giving up completely and seeing how that goes.
You sound really financially astute and in a great position for saving to buy.
You mentioned your essential expenditure but you haven't mentioned where else your money goes - that's the bit to hit, all the 'discretionary' spending. (Eg. I've saved about £40 in the last 5 weeks by cutting out the three takeaway coffees I was buying each week while I watched my kids activities. I now read magazines online for free via my library membership rather than paying for subscriptions - saving about another £10/month. In the past I've cut right back on spending on beauty products and makeup - I used to spend such a lot on stuff I didn't need on impulse. Same with clothes - I still buy them but I don't go crazy.)
Have you looked at moneysavingexpert?
Figure out how much you want to save per month, and save it at the start of the month, not at the end - it's easier to dip into money earmarked for saving if it's there in your current account.
I've never been much of a spender so my other spending is actually quite low. my big one was makeup but I have so much I don't even want to buy anymore . I used to have a coffee out 2/3 times a week but I'm done to 1 now. I love buying clothes and am trying to cut down on that semi successfully. I do Slimming World which is a £5 a week but I'm saving lots on junk food while doing slimming world lol. I buy food into the house as well as what I pay my parents but nothing major. Maybe £10 a week. We bulk buy so it works out great value. Yeah I've been on money saving expert. Thanks for the tips.
Maud - Thanks. That is very true
Your outgoings may be low but it's easy to accidentally spend more than you mean to. To save £8000 in a year you need to be putting away £667 per month. If 18 months £445, or 2 years £334. Whatever you choose, arrange a standing order to take that amount out of your account the day you get paid. Put it straight into a 60-day-notice savings account so that you can't touch it whatever happens.
For help in identifying savings potential and keeping an eye on discretionary spend I really recommended You Need A Budget (online).
You start off by entering today's balance in all current and savings accounts then 'allocate' all your money until the next time you get paid. First to immediate essentials and bills, direct debits etc. Then to all the 'lumpy' expenses that aren't regular but still need paying like car insurance. It has a function where you can fix a target date for this. So if you need £300 in six months time for car insurance it will tell you that you need to allocate £50 this month to have enough money in the bank for then. And if you use that £50 for something else it will tell you put aside £100 next month to stay on track.
Once you're done with essentials, if you have money left you allocate it either to discretionary spend - say, coffees out - or to specific savings e.g. house fund (again, you can set a goal of £8k in three years time, or whatever).
THEN - you track your spend (there's a phone app) - every time you buy a coffee or whatever you tap in the value, and which 'budget pot' it comes out of. And every week or two I check bank for the direct debut and stuff and check them off.
I find this helps me in two ways. First, when I sit down on payday and work this out, it helps me think 'do I want to spend £50 on coffees this month or would I rather have a few less and redirect £30 of that to savings?'
Then at the point at which I'm buying the coffee, I can look at my budget pot on my phone and if my allocated coffee find is spent out, I can choose to but the coffee anyway - but then it and me which pot I want to take the money from. You're not physically shuffling money around accounts, but you ate mentally and virtually moving it between pots. This makes it very conscious and explicit in my head- 'I am buying this coffee, and I'm redirecting money from my house fund to do so'. This is almost always true, but easy to let it wash by in the day to day and then wonder why you're not making progress in saving. And it is a much clearer thought process then a vague, guilty 'I really ought to spend less on coffee. Oh well, I haven't had that. many this month, have I?'
It also takes the stress out of car tax renewal month knowing you've set the money aside already
And if you're a bit obsessive about stuff like this (as I am) you'll probably find it quite fun. It's definitely satisfying watching savings start to grow. Despite being a good earner, I have always struggled with spending more than I earned, and frittering money - so I always felt broke but with nothing to show for it - no great holidays, no nice car etc. In about 9 months it has taken me from a position of basically using each months salary to pay off last months credit card bill, and having to use my bonus for the lumpy bills like car insurance, to spending within my means each month and, now, putting aside money to front-fund the lumpy bills. I think within a month or two I will have caught up with myself sufficiently that I can start actual saving. So I'm a bit of an evangelist. You're starting from a much better position than me as you're already good with money, but I still think this could help.
Good luck, I'm sure you'll get there!
<heads off to check out Lifetime ISAs>
Remember that once you have your own place your monthly expenses will be a lot more than £100 for keep. Doesn't mean it cant be done but you need to do some serious saving and work.
But it is all possible.
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