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).
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.