It's an exciting time when you can start thinking about buying your first home and experiencing that feeling of security in "your" home - as well as being able to change the wall colouring!
We know it can be difficult getting into your first home with several upfront costs to be covered before even thinking about a mortgage, so we're here to help!
Our sales team has supported many buyers through purchasing their first home, so we've collected our top tips to help you start saving today for your own first home.
1. Pay Off Any Large Debts:
Possibly one of the most daunting tasks before buying your first home is paying off as many of your current debts as possible. Time to knuckle down and put some money into your student loan, pay off credit cards and take ownership of those big purchases you've made. Having a clean slate will make it much easier to be approved for any home loans in the future and will also boost your credit rating.
The sooner you start, the easier it will be. Each week, fortnight or month, allot a set amount from your wages to go towards paying off your current debts as quickly as possible.
Clearing short-term debt makes it harder to save, so if you have several short-term debts with various companies, look at consolidating them into one loan on a lower interest rate to help you meet the payments and pay it down faster. This will help you see the total figure you need to clear.
2. Start Creating Small Saving Habits
Saving can be a long, strenuous process so it's better to start as soon as possible. Even putting aside as little as $5 per week can work wonders for your future saving habits.
Our greatest tool is budgeting - and keeping track of expenses - to help you save disposable income. Start a spreadsheet or keep track of your income versus your outgoing expenses to see where your money is going. This can help you make adjustments and figure out how much money can be saved realistically each week.
Also take into consideration the 50-20-30 rule. This is a money-management technique that divides your paycheck into three categories: 50% for essentials, 20% for savings and 30% for everything else. Utilising this tool early on in your financial journey will help establish good saving habits and keep you on top of your saving for years to come.
The real trick to saving is to start small as you figure out your budgets, then increase it as you progress and have more disposable income.
3. Cook More at Home, Pack Lunches, and Order Fewer Takeouts/Coffees
Did you know that you can save up to $2,000 a year by not purchasing coffees and preparing food at home? That's a lot of money that can be put into other things - like saving for your new home.
Plan your meals at home, budget your groceries to cater to your meals and cut back on how many times you order takeaways or dine out. Try cooking meals that you can freeze, or take the leftovers to work for lunch the next day – you’ll be surprised at how much money you accumulate.
Plus, making coffee at home (or at work if a coffee machine is provided) instead of ordering at cafes can also add to your savings - up to $1,000. Consider this: a jar of Moccona instant coffee from the supermarket for $9.00 can provide 20-25 cups of coffee. Compare that to the same number of cafe coffees, which could cost you up to $150! It's a big difference when you put it that way!
4. Monitor Your Progress
The more you see results, the more you'll be inspired to save.
There is no greater sight than watching the balance in your savings account get larger and larger. Set yourself goals to achieve your saving targets and celebrate the small wins. You could even set a challenge with your significant other, friends or family and have some fun while you save.
To monitor your progress, keep a spreadsheet (similar to your expenses tracking) to see how much money you're putting into your savings account and how close you're getting to your goals.
And if savings fall by the wayside because an unexpected cost pops up, it's important to keep the faith and start saving again as soon as possible.
5. Talk to a Mortgage Broker Early On In Your Journey to Your New Home
It can be hard to know what’s happening in the housing market if you're just getting into it, so talking to a mortgage broker can help you set savings goals that will put you in the best position to buy your first home.
Sometimes people can miss their moment to buy a home, simply by not knowing or understanding the market, having the wrong saving goals or not realising what is required from them to make a purchase.
Don't be afraid to ask for help, and it’s never too soon to start familiarising yourself with the market to find out what's happening.
A great idea to get you started is to visit open homes in your area, or where you want to buy. Stay in touch with agents by calling or emailing to see what these properties sell for – it will help you be more informed when it comes time for you to buy.
Our salespeople at Tremains are available for you to ask questions, learn about the current market and help you start taking steps towards your first home.
6. Be Honest With Yourself and Your Spending to Start Making Necessary Cuts
Another great adjustment you can make is evaluating your spending, and cut any unnecessary purchases.
Start asking yourself "Do I really need those shoes?" or "Is that concert really worth it?" to reduce spending, thereby leaving more money for saving. It is a hard process to start cutting back on things you want, but when it comes to your first home saving and prioritising is key.
Some simple ways to cut back on day-to-day expenses can include:
Find free or low-cost events to reduce entertainment spending
Cancel subscriptions/memberships you don’t use (stop making donations to the gym or Netflix if you don't use it)
Commit to eating out less and trying places that fall into the “cheap eats” category
Give yourself a “cooling off period.” When tempted by a nonessential purchase, wait a few days. You'll find your desire for the item may reduce as you focus and re-prioritise your spending
We're not saying don't have fun, just that it's possible to find new and cheaper ways to have fun while you save!
7. Declutter and Sell Items You No Longer Need
Who doesn't love a good clearout of things no longer needed? It's a most satisfying feeling ..
What better way to start saving, and preparing yourself early on for your new home, than by getting rid of things you don't need or want around your home. Things you don't need can be sold or donated, and you'll feel good about a more tidy and organised home.
Having an organised home can benefit you in the long-run with keeping other aspects of your life tidy - including keeping on top of your savings habits.
Decluttering is a great way to start preparing for the big move.
8. Set up an Automatic Payment to Your Savings Account
Automatic payments are a great tool to ensure you're depositing money into your savings on a regular basis and keeping up with your savings goals.
Start off with a small amount that you know you won't miss, such as $5 or $10 a week, and increase the amount as you go. That way you can “set and forget' your payments, knowing you're still contributing to your savings, without too much admin!
However, it's important to remember to evaluate your goals and expenses on a regular basis to ensure you're on the right track!
9. Keep Adding to your KiwiSaver as Much as Possible
In New Zealand, KiwiSaver is a great savings tool as it is inaccessible until you need it.
Most of us have had a KiwiSaver account for years, usually since we started working, with funds being deducted directly from our wages - along with our employers’ contributions. Ideally, if your goal is to own a home in New Zealand, you'll have been contributing to this account long before thinking about your first home.
If not, have a chat to your bank about KiwiSaver to see if the scheme is right for you.
For those who have a KiwiSaver account, it's important to make sure you’re contributing at least $1,042 each year, as this will entitle you to a handy $521 savings boost from the government.
If you don't feel KiwiSaver is right for you, go back to the 50-20-30 rule which will help you keep on top of your savings goals.
10. Get Your Support Crew Together for Accountability
Sharing goals with friends and family gives them the opportunity to help you reach your targets and get into your first home. Whether it's splitting bills where possible, meeting at home rather than the local bar or cafe or just keeping you accountable, friends and family can be your biggest supporters of you reaching your goals.
Financial educator and property investor Lisa Dudson says keeping your savings goals top-of-mind and feeling positive about them makes them easier to achieve.
Setting yourself a challenge - either with friends or family or just a personal challenge and encouraging others to support you - will put you on a strong footing to reach your goals without distraction. Owning your first home shouldn't be stressful and small steps early on will benefit you down the line.
So why not take that first step and contact your preferred Tremains consultant today to begin planning your journey towards owning your first home.