Saving money to buy a house may seem like an impossible task but it certainly can be done with some hard work and dedication. Though it might take a significant period of time to achieve, it does pay off in the end.
So, how exactly can and should you save? Here are Canstar’s tips to help you save for your home.
Track your spending
Keeping track of what you spend on can be a real eye-opener and will help you identify all the things that you spend money on unnecessarily.
The best way to keep track of your spending habits is to maintain a diary or use a smartphone app, such as Expense Manager, to keep track of where and what you’re spending on each month.
In time, you’ll be able to identify areas in which you should cut back on.
Write a budget
Now that you have a spending diary, you’ll be able to write a budget to help you save. Start by using the totals from your diary, then look for ways to cut down certain areas and find money within your money.
You’ll be surprised by just how much you’ll be able to tuck away into your savings account once you’ve done a budget – and when you stick to it.
Be prepared to make some sacrifices
Do you splurge on luxuries like buying expensive makeup, eating out most days of the week or watching every new release movie at the cinemas?
Saving for a first home requires making some sacrifices. Your spending diary will come in handy here, and will help with identifying those little things you can cut back on.
Naturally, you’ll need to accept that for a few months, or even years, you may not be able to have all the flash things your friends buy or the expensive nights out. Just remember, these sacrifices are only temporary and home ownership will lead to a better standard of living in the long run.
Cut up your credit cards
Credit cards can very easily encourage you to spend more than you have. If you need to spend money, use cash instead. That way, you only spend how much you have on you, so you’re restricted from spending money that you don’t actually have.
However, if you must use a credit card, be sure to use one that comes with low interest rates or fees, as high-rate interest credit cards can create a new problem altogether – in the form of extra debt – if you aren’t paying off the credit card in full each month.
Compare credit cards using Canstar’s comparison tool and find the best credit card that will encourage saving.
Enrolling into a KiwiSaver scheme doesn’t just help you save for your retirement. The savings initiative can also help you save for your first home by providing two benefits to members: a KiwiSaver HomeStart Grant and a KiwiSaver withdrawal for a house deposit.
KiwiSaver HomeStart Grant
The Housing New Zealand HomeStart Grant is a benefit that first home buyers may be eligible for if they have been regularly contributing to KiwiSaver for at least three years. Read more about this grant here.
KiwiSaver withdrawal for a house deposit
Even if KiwiSaver members don’t qualify for the above grant, they are still able to withdraw their own and their employer’s contributions in order to purchase their first home.
To make a KiwiSaver withdrawal, you’ll need to apply to your KiwiSaver provider. You can learn more about withdrawing your KiwiSaver contributions to buy your first home here and compare KiwiSaver funds by using Canstar’s comparison tool here.
Find additional work
In today’s economy, working multiple jobs, or having a side hustle, can help you earn a little extra to assist in saving for a deposit. If you can’t take on a second job, look at potentially working additional hours or take up casual work in the weekends, like babysitting. After all, all money is good money and every little bit counts.
Be clever about making extra money or saving
Being thrifty comes naturally to some Kiwis and often finding unusual ways to save money can make a difference. Look for different ways to make a few extra dollars such as selling unwanted items on TradeMe or Facebook Marketplace.
Saving for a home is not always easy and can’t be done overnight. However, by being realistic about what you can and can’t achieve and sticking to a plan, you’ll likely see positive results in your savings journey.
Remember to be smart about choosing the right home loan as well as not all home loans are created equal. Use Canstar’s home loan comparison tool to help you find the right home loan to suit your needs.