Some days saving for a first home can feel like running a marathon and, as any long distance runner knows, at some stage you’ll hit a wall of fatigue. In running terms that’s the point where energy levels start to drop and athletes have to fight the urge to toss in the towel and head back to the change rooms.
According to the Real Estate Institute of New Zealand, the national median house price was $505,000 in July this year. The median house price in Auckland is an eye-watering $825,000! This, of course, is impacting the level of home loan repayments required.
|Central Otago Lakes:||$660,000|
|New Zealand Total:||$505,000|
In the face of steep prices you can find your enthusiasm for growing your savings starting to diminish or even become non-existent. So it can pay to take a leaf out of the book of a professional runner to forge ahead even when the wall of fatigue tries to slow them down.
Looking for a property: Keep a consistent pace
Throwing as much cash as possible into your savings without allowing for fun stuff is a sure fire way to burn out. Life is meant to be enjoyed, and you still need to able to head out on the town occasionally, take a break on vacation or chill out with friends.
Aiming to stick to a consistent pace of saving can help you avoid saving fatigue. Crunch the numbers to work out how much you need to save on a regular basis to reach your first home deposit target. Once you have the numbers in place it’s just a matter of maintaining the momentum.
Fuel your head space
Marathon runners often use visualisation techniques to stay motivated. They imagine themselves crossing the line first or breaking a long-held record, and that can be the tonic they need to keep going.
If your enthusiasm for savings is flagging, stay motivated by picturing how great it’s going to feel to look at your home and think “Yep, I own that”. Sure, you may not win a gold medal but remember, your home is a tax-free asset and an excellent investment. Buying your first home could certainly put you on top of the winner’s podium when it comes to growing personal wealth.
Run your own race
Don’t feel pressured to buy in an expensive suburb just because your friends, work mates or siblings are. There is value to be found in suburbs further out from the city centre. These may not be your dream location but sometimes homes in outer suburbs can benefit from renovations, and that makes them affordable – and they offer a blank canvas for you to add value through improvements. Run your own race and buy where you can afford.
Carb stack your savings
In the same way that distance runners take advantage of stopping points to fuel up on carbohydrates, first home buyers can boost their deposit by improving the return their money earns.
Online savings accounts can offer higher interest than everyday transaction accounts but if you’ve had your existing account for a while check to see what your money is earning – a high introductory rate may have lapsed. Explore options to earn bonus rates, like holding your everyday account and savings account with the same bank. It all helps you smash through the wall of fatigue and hit the finish line a whole lot sooner.
So, next time you feel yourself out of breath and ready to throw in the towel (or this case throw in your savings) remind yourself that the journey towards your first home was never meant to be easy but is incredibly rewarding once you pass the finish line. There’s no doubt that once you’re sitting in your new home, relaxing with a cup of tea and your feet up that the hard slog of the marathon will be nothing but a distant memory.