Buying a home is no small thing. It’s a major financial goal for many of us.
Saving up money for a house deposit is a massive task and may seem almost impossible for many millennials.
But no matter what your salary or living costs, there are things you can do to maximise your saving power and increase your deposit. I promise!
Here are my top tips on how to save money to buy a house:
How to save money for a house: 6 straightforward tips
Track your spending and savings
Do you know how much money you spend each month? If not, why not?
The simple act of writing down your spending has been shown to make us spend less. It makes us more aware of spontaneous purchases and helps highlight areas where we’re leaking money, such as takeaways or work lunches.
If you don’t already have a budget, now that you’re saving to buy a house it’s the perfect time to make one.
The twin forces of planning your spending budget in advance, plus keeping track of how much you actually spend, will make you feel on top of your money and empowered to save more.
I use the budgeting app YNAB which lets me track spending on my phone and also generate lots of geeky charts and data on the desktop version. But you can also use the notes app on your phone, or a simple notebook.
In the same way, tracking your house savings helps you feel motivated and focused on your goal. So when saving for a house, make sure you keep a record of exactly how much you managed to put away each month.
Sure, you’re saving money for a house. But are you really saving money?
There are likely lots of extra ways to save money in everyday life without going to any crazy frugal extremes.
For example, you’ve probably already cut back on buying unessential items, but sometimes we do need new things. That’s ok! If you shop online, make sure to use cashback sites like TopCashBack (my fave!) to get money back on every purchase.
You can also install the Pouch app on your browser to automatically check for any discount codes.
And if you need a new outfit, there are websites like Everything 5 Pounds clothing where you can find some real bargains.
You could even try a no-spend weekend once in a while. There are loads of fun things to do on the weekend with no money necessary.
Little things like this can really add up and can give you a substantial extra amount to add to your deposit savings each month.
Check out my post 27 Genius Life Hacks That Will Save You Money for more smart ways to save money every day.
Get a side hustle
It’s almost always more effective to make more money rather than squeezing savings out of your budget.
Even if you work full time and don’t get paid overtime, there are plenty of ways to make extra money.
There are even lots of side hustles you can do from home, online, in your spare time! Even if you just have 30 minutes spare each day you can use that to take surveys or share affiliate links on Pinterest.
Here are some of the other things I’ve personally done to make extra money:
- Blogging (I make over £1,000 each month fitting my blog around a day job!)
- Selling second hand books
- Selling T-shirts on Amazon
- Matched betting (VERY profitable side hustle in the UK only)
- Website testing
Other ideas include dog walking, babysitting, Uber driving, deliveries, and finding freelance work on sites like Fiverr.
Making extra money is a sure-fire way to accelerate your house savings account!
- Related post: 11 Tried-and-Tested Ways to Make Money Online in the UK
So you’ve got a side hustle to bring in more cash, and you’re cutting back wherever you can. What are you going to do with all this extra money?
Whatever you do, don’t just let it let it pile up in your bank account!
For a start, you’re more likely to accidentally spend it if it’s in your main cash account.
Secondly, it’s probably not the most effective way to save.
It usually takes several years to save for a house, so make sure your money is getting the best interest rate possible while you work towards your target.
If you’re in the UK like me, saving money in an ISA means you don’t pay any tax on your interest.
And the LISA (Lifetime ISA) or Help to Buy ISA both offer a 25% tax-free bonus from the government for first time buyers – it’s free money!
Move in with friends or family
If you are serious about buying your own house fast, you may need to make some serious adjustments to your lifestyle in the short term.
Housing is usually our biggest monthly cost, so find ways to slash your accommodation budget as much as possible.
For many people, that may mean moving back in with your parents temporarily. This is usually not ideal for either the kids or parents, but make sure you have a plan to save everything you’re spending on rent.
Of course, your parents may expect some rent payment too – it’s only fair! But hopefully they’ll be sympathetic that you’re saving money for a house, and they’ll charge you less than market rate.
If you don’t have family nearby, there are other ways to save on accommodation. Maybe you need to move into a cheaper area, or share a room with a friend.
Many couples want to live as a twosome for privacy, but you could knock several years off your savings plan by sharing a room in a house share.
You can always go extreme and become a property guardian. This is when you live temporarily in an empty building to look after it for a cut-price rent.
It might not sound ideal, but if you’re serious about saving money for a home of your own it could be worth looking into!
- Related post: 8 Ways to Live Absolutely Rent Free
Sell your clutter
Preparing to move house is a great time to declutter. And who knows – you may be able to turn that clutter into cash to add to your savings fund!
You can sell second hand goods on eBay or Facebook. If you have anything potentially valuable such as collectors’ items, make sure you do your research first to get the best price.
By having a clear out and selling everything you don’t need, you’ll have more money to put towards your deposit and you’ll make your eventual move smoother – double whammy!
If you’re on the road to home ownership, congratulations! It’s a huge milestone which will feel all the more impressive after all your hard work saving and side hustling.
When budgeting for your new place, don’t forget to factor in all the extra costs such as stamp duty and solicitor’s fees. These can really add up and it would be a shame to delay your house purchase because of unexpected costs.
If you’re in the UK, Money Saving Expert has a great guide to all those extra costs to help you budget.
Do you have any other tips to save money for a house deposit? Let me know!