Save for that deposit
YOUR OWN HOME: PLAN A BUDGET, TRACK SPENDING AND BE IN CONTROL
Ideally, you would want to have 10% to 12% of your dream property value.
Buying and owning a house is a huge desire for many South Africans but the prospect of being able to do so in your 20s or 30s may seem like a pipe dream.
Inflated property prices, a difficult economic landscape and possibly even the restraints of lingering debts, such as student loans, may leave you feeling that owning property is unattainable.
One way to ensure you take achievable steps towards your future home is to start saving for a deposit.
Here are some tips on how to do it:
Ideally, you would want to have 10% to 12% of your dream property value set aside as the deposit, which is paid upfront.
So, sit down and think about how much you want to save and then take a hard look at your finances. Where can you afford to cut down? How can you save more and in which areas of your life might you be overspending?
Once you have decided where you can save and cut back, prepare a new budget and stick to it by making sure you put your savings away the minute your paycheque clears.
One of the best ways to make sure that you’re sticking to your budget and not spending frivolously is to track your spending.
Opt for a budgeting programme or app, much like the excellent (and free) app 22seven.
With this savvy application, you can track your money as well as set up a personalised budget, invest your money simply and have all your financial records in one place.
You have full control over your finances, budget and spending habits.
One of the best ways to ensure you can save for your deposit is to cut down on needless spending. Here are some of the ways to do that:
What portion of your income does your rent demand?
If it’s anything from 30% onwards, it’s time to look for more affordable accommodation.
Find something you share with others, opt for a smaller room or move to a less expensive area – don’t pay an inordinate amount of money towards someone else’s home loan when you can save for your own.
To save enough for a decent deposit for a house you’ll need to focus all of your savings on that.
That’s not to say you can never go surfing in Hawaii or hot air ballooning in Turkey, you might just need to exercise a little patience and put it off for a little while. Right now, rather invest in something you can one day own (and live in) opposed to “investing” in fleeting experiences.
Create a separate savings account for your deposit. Open a fixed deposit or a savings account that yields high interest.
Shirley Smith is chief operating officer at Old Mutual Finance. This was first published on Old Mutual Finance’s blog.