Accelerate deposit savings
Property buyers with deposits are more likely to be approved for a home loan – and for interest rate concessions that could cut thousands of rands off the total cost of their home over 20 years.
Before you start cutting back on your expenses, come up with a definite savings plan and timeframe. You’ll need to strike a balance between living miserably and overspending when you shop.
The best way to do that is to decide on a specific amount to save each month and put that aside when you pay all your accounts.
If you manage to add to this minimum during the month, it’s a bonus. As you get into the habit of saving, you’ll enjoy finding creative ways to reach your goal more quickly.
Speak to your bank or financial advisor about opening an account specifically for your deposit savings, that offers you the best interest rate and lowest charges.
Next, work at paying off any credit card or store card balances as soon as possible, then divert whatever cash was going towards those debts into your deposit savings account.
Keep one credit card for emergencies only (the one with the lowest interest rate) and stop buying anything on “budget” terms or layby.
This will also improve your credit profile and your chances of being approved for a home loan.
Savers should reduce banking costs by using online or mobile banking services, and regularly check their bank statements to eliminate micro purchases and unwanted subscriptions or premiums. Many banking apps have budgeting tools to help you track what you spend and save.
Giving up the “little luxuries” for a while can make a really big difference to the time it’ll take to accumulate a deposit.
Take a break from your ShowMax/Netflix subscription for a few months, or stick to home-cooked meals instead of eating out.
Try taking your own coffee to work, running with your friends instead of at gym, and car-pooling.
Selling unneeded assets is another great way to generate extra savings.
You might also be able to supplement your savings by doing part-time work at night or on weekends.
Gerhard Kotzé is MD of RealNet
There are many ways to save. Try taking your own coffee to work, running with your friends instead of at gym, and car-pooling.