7 Savings Strategies for first time buyers

The thought of saving for a house deposit may seem as daunting as climbing Everest once you start to realise how much of a deposit you need to save for your first home and you might be wondering how exactly to get your hands on the money. It can be difficult to know where to start saving. You might have existing savings or family to help you, but even if you don’t, there are lots of ways you can save, whether you are starting from scratch or are a more accomplished saver.

How to save money for a house deposit

1. Save your change

As a first time buyer, it’s easy to think that your small change is just that – and that it’s unlikely to make a difference. But once you start putting it aside, you’ll be surprised by how it adds up. But once you start putting it aside, you’ll be surprised by how it adds up.

  • Round up your spending to the next pound or five pounds and transfer the extra into savings. Some bank accounts and apps help you do this.
  • Don’t spend your change. Keep it and put it into a jar with a narrow neck before paying it into your savings account. Or choose a certain type of coin or note – like £2 coins or £5 notes – and save them.

2. Watch your spending

So often we spend money without thinking about it; paying a little more attention can put you in a better position as a first time buyer and help you to control your spending and start saving.

  • It’s easier to be mindful about spending if you pay using cash rather than cards.
  • Take the £5 challenge. Once essentials and bills are taken care of, give yourself a limit of £5 a day to spend. Put anything that’s left into your savings account.
  • Review your spending and limit it where you can. Decide what you really can’t live without and then make sure you get the best deal on the things you do need. If you find it hard to know where your money goes, there are apps you can use to help you track your spending.

3. Make a switch

You can make big savings by reassessing what you consider to be ‘essential’. Here are some ideas.

  • See what swaps you can make to save yourself money. This could be as major as moving somewhere with cheaper rent or moving back in with family to help you save. Or as small as swapping your daily coffee-shop latte for one you make at home.
  • Try the ‘Downshift challenge’ – move your food shopping to cheaper supermarket own brands or basics brands. Or switch your whole supermarket shop to a budget supermarket like Aldi or Lidl.
  • If there’s something you often spend money on, see if there’s a cheaper or free option. Like switching from a TV subscription to watching on-demand TV on your computer. Or cancelling your gym membership and buying some weights to train at home instead. You could also look at swapping your mobile phone contract for a sim-only deal.

Remember to put the amount you’re saving into your savings account. It’s much easier to make little sacrifices if you can see your savings growing at the same time.

4. Save by planning ahead

If you’re serious about saving towards your first home, you’ll find a little bit of planning can go a long way…

  • Plan a realistic budget and stick to it. You could set up a budget in a spreadsheet, write it on the back of an envelope, or use an online budget calculator (MoneySavingExpert has a very comprehensive one. It’ll show you where your money goes each month and help you to manage it.
  • Plan and prepare your meals for the week in advance, including lunches.If you cook at home rather than eating out make sure you save the amount you would have spent. Avoid takeaways and learn to make the things you would normally get as a takeaway yourself.
  • If you tend to impulse buy in the supermarket, make a weekly meal plan and a shopping list, then only buy the things on your list (no cheating!). This is sometimes easier if you shop online, you can review your list at the end and remove anything that’s non-essential.

5. Out of sight, out of mind

Nobody likes paying bills and it’s easy to feel reluctant about locking your hard-earned cash away, so take the decision out of your hands by automating your finances.

Separate your spending, bills and savings into different accounts. Don’t touch the money in the bills and savings accounts and only have a card for your spending account. Put your savings somewhere you can’t easily access like a savings account with no card attached or one which doesn’t allow withdrawals. You could also avoid registering for an online account if you have a choice and don’t link it to your current account. Automate your savings and bills so the money comes out as soon as you get paid, and you’ll be less likely to miss it.

6. Shop around to save

Why pay more than you have to? Here are some tips to help you spend more efficiently.

Use comparison sites to find the cheapest mobile phone contracts, insurance and energy providers. Keep checking and always switch to the cheapest whenever you can. If you need to make a purchase, always check for offers or vouchers or try shopping through a cashback site to make your spending pay – the amount can really mount up.

7. Make the most of your savings

Finally, make sure all your work pays off by squirrelling what you save away into a hard-working savings account.

Your savings are hard-won, so make sure you have them in an account that gives you as much benefit as possible. A Lifetime ISA could be a good way to save up for a house deposit. It’s available to people aged between 18 and 39 and you can pay in up to £4,000 every year, plus the government tops up your savings with 25% of what you’ve saved that year (up to a total of £1,000).

Find out more about the different ISAs available and how to choose the best one for you

The content of this article is for information purposes only and does not constitute financial advice. We do not offer financial advice. If you’re unsure as to the suitability of a product you should seek advice from a Financial Adviser. You may have to pay for this advice.

12 easy ways to save money

Simple savings tips for every month, to help you make 2019 the year you spend less and save more.

January: Clear the decks

If you need to make some room for all those Christmas gifts and sale purchases, decluttering is a frugal win-win. ebay, car boot sales and local Facebook marketplaces are all good places to sell your things.

Saving: Will depend on what you have to sell. For example, if you’re clearing out old DVDs and CDs you could earn around 15p-£1 per item.

February: Learn to share

Become part of the ‘sharing economy’, on whatever scale you like. Join forces with your neighbours to swap babysitting services, join a carshare scheme or host a ‘swishing’ party, where guests bring a range of items to swap around. There’s a big market out there…

Saving: At the very least, you could save around £7 per hour on babysitting costs.

March: It’s time to pack up

If you buy your lunch it can easily cost around £5 per day, which really adds up over the course of a year. If the idea of a cheese sandwich every day doesn’t fill you with joy, there is lots of inspiration for cheap, easy packed lunches online – you could try easy pasta salads, inventive wraps and simple soups to name a few!

Saving: Hundreds of pounds over a year, and cutting out the odd treat can be great for your savings habits, see our guide

April: Drop your shop costs

Make this the month you reduce those hefty grocery bills: try shopping at discount supermarkets such as Aldi or Lidl, or use mysupermarket.com to find out where you can get your groceries at the best price. Always have a shopping list and try Martin Lewis’ downshift challenge – try dropping a brand level on everything you buy and see if you can really taste the difference.

Saving: Mysupermarket.co.uk claims to save shoppers up to 30% on every shop. While downshifting from branded products could save over £1,400 on a £70 weekly shop across the course of a year

May: Salad days

Those packets of herbs and salads can really add up – instead, buy a few packets of seeds, stick them in some compost and you can have tasty salad and herbs for a fraction of the price. They’re dead easy to grow, even in a window box if necessary, and you can plant them straight into pots outside from May.

Saving: A packet of herbs cost around 70p, a bag of salad up to £1.50 each time.

June: Before you hit the summer sales…

If you find yourself about to buy something on impulse, stop! Ask yourself if you really need it and how much you would actually use/wear it. Give yourself 10 seconds before deciding whether you are going to buy it or not. For bigger purchases, use the 30-day rule: after this time, you may find the urge to buy isn’t there any more, and if it is, you’ll have a better perspective on its cost.

Saving: Depends how much of an impulse buyer you are…

July: Still convinced you need it? Then buy it cheaper

There is rarely a need to pay full price for anything. Could you buy it secondhand on eBay, swap it for something you don’t need on a site like Swapz? If not, shop around for the cheapest deal using a comparison site such as Pricerunner, try discounted outlet shops, use vouchers – just don’t pay full price!

Saving: Anything from a few pounds to hundreds of pounds.

August: Bottle it up

OK, it might be hot but why not fill up a reusable bottle with tap water rather than spending money on bottled water or soft drinks? Not only is it healthy, it’s better for the environment too.

Saving: Campaign group Tapwater.org claims we spend an average £25,000 on bottled water and soft drinks in our lifetime.

September: Save your energy

It sounds like a lot of hassle, but there are so many comparison sites available that it really doesn’t take long to find out if you could pay less for your utility bills. Try using sites such as uSwitch.com and switch.which.co.uk, or simply type ‘switch energy supplier’ into your search engine.

Saving: uSwitch reports savings of up to £491 a year.

October: Banish the booze

Take part in the increasingly popular Go Sober for October or Stoptober campaigns and you could boost your savings as well as your health, by investing all the money you’d normally spend on alcohol or cigarettes.

Saving: The average household spends £16.10 a week on alcohol at home and while out – that’s a whopping £64.40 a month. Stop the average £5.20 daily spend on smoking you could save around £1,872 per year!

November: Budget Time

While Philip Hammond is doing his thing, you can do yours too. Working out where your money goes every month is a fundamental step towards saving. Keep a spending diary, check your bills and work out what your ‘necessities’ spend is each month. Then take a portion of what is left after the essentials and put it into your savings as soon as you get paid.

Saving: Depends on income and expenditure. Find out how to draw up a budget with our blog.

December: Seasonal spending

The cheapest time to buy Christmas cards, wrapping paper and decorations is at the end of December – hit the shops then and you can shave a significant amount off next year’s seasonal spend. Do the same with every annual event – buy next year’s Halloween costumes and decorations on 1 November, for example, and you’ll be quids in.

Saving: You’ll often be able to buy items at half price.

Did you know that simply setting a savings goal could save you up to an extra £550 per year? Find out how.

The content of this article is for information purposes only and does not constitute financial advice. We do not offer financial advice. If you’re unsure as to the suitability of a product you should seek advice from a Financial Adviser. You may have to pay for this advice.