Owning your own home has long been a pillar of the Australian dream for most people. However with sky rocketing housing costs and stagnant wages it is much more difficult to break into the market particularly in Australian cities than it was for our parents and grandparents. It is difficult but not impossible for home ownership to be a part of your plan for financial security. I followed these tips to buy my first (& only) house on a single income when I was 23 in 2019.
Follow these steps in order to save your deposit:
1.Only spend money on Needs and not Wants (Mostly). It goes without saying that if you want to save a substantial amount of money then you need to spend a lot less than you earn. Did someone say the B word? BUDGET! There is no silver bullet to saving a house deposit but if you are willing to only spend on your NEEDS and sacrifice the wants you can get there. Uber eats, bought lunches, cocktail nights, Gym memberships, new clothes, a fancy car, subscription services and the latest gadgets are all wants. No one truly needs these things so start to think what you can axe from your weekly spending as every dollar counts!
2. Find the best interest rate for your savings account. At the moment interest rates are at historic lows. This is good for when you have the mortgage but bad for when you are trying to grow your savings with the help of compounding interest. Bonus savers tend to have higher interest rates than term deposits and you can keep adding to them. This means the principal amount that you are earning your interest on gets higher and the more interest you will earn.
3. Reduce your Housing cost. Move into the cheapest ugliest rental arrangement that you can find. If you have to share house with 4 university students whilst you work full time, do it. If you are able to move in with your parents or a family member for a cheaper rent/board, do it. The sacrifice of one to two years living on top of others or with family will be well worth it when it helps you achieve your goal of buying your own home. Previous generations did not have to do this but often times exorbitant rent prices are a huge barrier for young Aussies to save their deposit and get their foot on the property ladder.
4. Consider alternative education pathways. Of course I am not advocating for people not to go to university. University pathways have great success with leading to well paid professional jobs a lot of the time. However I do encourage young women to really consider what they choose to study and be sure to research the job outcomes for that particular industry before starting the course. There are also a lot of people that succeed with high paying trade jobs, government jobs or sales/administration jobs through doing apprenticeships, traineeships or old fashioned learning on the job. Don’t discount them as solid career avenues into well paid roles and it means getting into the work force straight after school. University will always be available to you so please ensure you are making the right choice of degree and are well informed about career prospects before accumulating a Hecs debt.
5. Consider that in order to afford a house, you won’t be buying your dream house. Have you ever heard the saying, “buy the worst house on the best street.” I am sure you have. My house was a complete dive. The walls had cracks, The kitchen was straight out of the 1950’s and the bathroom was horrifying. But it was in a good quiet street in a good area! All of the cosmetic things can be tackled in time once you have saved the money. As long as the house is serviceable and you are prepared to live a bit rough for a while it will be worth it in the end. Not to mention the capital growth you will get from renovating it, just don’t overcapitalise on it!
5.Ditch the expensive car or god forbid car loan? Australians love new cars bought straight from the car dealership or even worse straight from the dealership on finance. This is despite the fact that the car depreciates 10% as soon as you drive it off the lot and continues to drop in value each year. If you have an expensive car or an expensive car payment consider selling it and downgrading to a reliable used car. It won’t impress your friends and you won’t be driving around in luxury but a used Toyota corolla will be doing the exact same job as the brand new Mazda but for thirty grand less in cost.
6. Where are you willing to move to in order to escape renting? Yes I know everyone wants to live 15 minutes from the beach or a 10 minute bike ride from work but depending on what part of Australia you live in you may have to consider being more flexible. Are you willing to do a long commute? are you willing to move to a cheaper city or a regional hub somewhere? Everyone is in a different situation when it comes to their job, income, family commitments and location etc but one thing will always remain true as a first home buyer in Australia. Something has to give, whether its sacrificing on location, size or condition of the house. The financial security of owning your own home prior to retirement cannot be understated for the average Aussie.
