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The secret to saving for your first home loan deposit

So you want to save money to apply for a Home Loan but are struggling to save?

The two secrets when it comes to saving for a home loan deposit are 1) Be realistic about your lifestyle and what you are willing to give up and 2) Track your actual spend.

Creating a budget can be a frustrating task. The first step to creating a budget is being realistic about your lifestyle and what you are willing to give up. This way you know exactly how much money you have coming in and, and how much is going out. Once you have created your budget go back and review it to see if you have been honest with yourself as this will help to create a true picture of your finances.

It is all good to say you will stick to your budget but when reality meets perception it is sometimes hard to align. The most effective way to be accountable for your budget is to write down your actual spend, keep it in a notebook in your bag, or download an iPhone app (Jumsoft Money has everything you need to keep track of your financial transactions as well as create and maintain budgets) to help you record it.

To help you stick to your home loan deposit budget we have provided some useful tips:

1. Be realistic
Sure, we could all save a bundle if we didn't have to eat or entertain ourselves. You can cut your grocery bill by up to 15% or so, but a 25% or more reduction in spending is just unrealistic. Plan on spending some money on entertainment, everybody needs some reward.

2. Find free activities
Saving for a Home Loan doesn't mean you have to become a hermit. Not everything in life costs money create a list of free things to do each month for example a concert in the park, hiking on the weekend visit a free museum. Check your local papers and the internet for ideas.

3. Correcting bad spending habits
A budget not only teaches us how to save but it also helps to identify our guilty pleasures and bad spending habits. Plan to give yourself a guilty pleasure every now and then, just make sure it is within the budget.

4. Plan for the unexpected
Make sure you put aside some emergency funds for unexpected events (medical bills, car repairs, loss of employment, etc.). NOTE THIS IS FOR REAL EMERGENCIES NOT SO YOU CAN GO SHOPPING OR SPLURGE ON A NIGHT OUT.

5. Avoid materialism and be thankful for what you have
In this day and age where there is so much focus on creating personal wealth, materialism often gets the best of us. Avoid attachments to material possessions and you will find that budgeting takes care of itself. More importantly, you will afford yourself a simpler yet fuller life while you appreciate what you have. Focus on your needs, not your wants.

Remember you are budgeting your money for a reason- make it count.

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