Why Saving For A House Deposit Isn’t As Unrealistic As You Might Think
So you want to buy a house. Not today, but some day. But when you read the headlines about housing affordability, you can’t help but feel discouraged.
The media makes it seem like there’s a housing apocalypse out there: in 30 years you’ll be spending 70% of your salary to rent a cupboard on the outskirts of the city. That cupboard will be owned by a baby boomer who has a portfolio of 20 investment properties and criticises you for having once tasted an avocado. How will you ever own your own home?!
Forget the haters: millennials can buy houses. We spoke to millennials who have been there and done that, for their advice on how to do it yourself.
Set the goal
If you don’t have a plan, your dream of buying a home is just that – a dream. So the first step is to get saving for that deposit.
You’ll eventually need 10-20% of the sale price of the house you’re buying, but at the moment the important thing is to start saving.
24-year-old Alex H. recently bought an apartment in Western Sydney. He says having a goal helped him to save. “I started getting serious about my saving when I started working full-time, which was about six years ago. I’ve always had the idea that I wanted to own property so my savings have always been building up to that.”
Chip away at it
Bonnie Sutherland says saving for a deposit “seemed completely insurmountable at the outset but I did it slowly over 7 years by simply saving as much as I could afford, not touching those savings and chipping away at it.”
It’s a classic “it won’t happen overnight” situation. You need to play the long game here – you’ll have to wait a while and watch those savings grow bit by bit. But it’ll happen eventually. Alex echoes this sentiment: “It just took a lot of time and being strategic about where my money was going.”
23-year-old Hayley* has bought a house in a rural area because that’s what she can afford now. She sees it as a step on the ladder. “Put that house in Sydney’s Inner West on your ‘nice to have one day’ list and focus on the ‘what’s possible in my current situation’ list,” she advises.
Don’t touch it
Alex says automating his savings has been key to getting his deposit together. “I have my savings on direct debit so I don’t even see it – that money doesn’t even exist for me!”
Bonnie also emphasises this point. “When your pay hits your bank account, you need to immediately siphon off the largest possible chunk you can afford into an untouchable savings account.”
Stick with it
It might seem like a long road, but remember the pay off: four walls of your own, and a hell of a lot of pride in your ability to work towards a long-term goal. Alex H. says saving might take time, but it isn’t hard. “Labouring all day is hard! Saving money is just about being consistent and sticking to your goals.”
Hayley says you’ve got to start where you’re at. “Start earning, saving and sacrificing today and your future self will thank you. No one else is going to do this for you.”
*Name has been changed.
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