Trying to get on the property ladder can feel like a really daunting task, but it doesn’t need to be. Once you find a way of saving that works for you, it’s literally just a waiting game until you have enough money in the bank. So, to help, we’ve compiled a list of ways in which you can start saving immediately!
1. Set a budget…and stick to it!
Setting a budget is the easy part, but actually sticking to it is seemingly more difficult. The more understanding and sight you have of your outgoings, the more likely you are to be able to achieve your goals. There are free bills apps such as My Finance out there that create graphs, highlighting how much you’re spending each month, so you can see where cutbacks may be required. They’re also helpful for working out how much you have left after all of your bills have gone out, so you can budget with your remaining funds week by week.
2. Savings accounts
Do your research and find savings accounts that offer high interest rates, so even if you can only save a small amount each month, every penny counts! MoneySuperMarket can show you which ones are the most suited to you and your goals and once you’re signed up, begin transferring funds! This works by out of sight, out of mind logic too – if it isn’t in your main account, you’ll be less inclined to spend the funds you can’t see. If you’re really up to the challenge, you can get savings accounts where there is a delay in withdrawing funds, so it removes the temptation if you don’t have instant transfer options available to you.
3. Essentials only
This can be as drastic as you want to make it. If a mortgage deposit is your one focus, you can temporarily cut back or completely cut out on nights out and holidays, things that take up huge amounts of your wages each month. If that scares you and you just want to be a bit savvier, you can try finding cheaper food brands, you’d be surprised how much this adds up month by month. Alternatively, if like the rest of us, you have a drawer full of carrier bags…take them with you, so you don’t find yourself spending out endlessly on plastic bags! Plus, that’s better for the environment too, win-win.
4. Savings hacks
There are plenty of hacks for people first starting out, who have never normally been any good at saving, for example, the penny-saving challenge, or the envelope challenge.
The penny-saving challenge works on the principle that you transfer a penny into savings every day, increasing the amount by 1p every day. So, day 1 is 1p, day 2 is 2p, day 10 is 10p, day 365 is £3.65. and so on. By the end of the year, it works out that you save almost £700. This works because of the way it changes your mind on money – you might think you’re unable to save £3.65 a day, however, that’s the cost of a meal deal at your local supermarket which you would buy without hesitation. Once the hard part is done, you’ll find it much easier to save £100+ every month, so although it may seem like a steep learning curve, it’s a worthwhile one!
The envelope challenge is as the name suggests, a box of envelopes with different amounts written on the front, ranging from £1 - £100. Each week, you pull a random envelope out of the box and save that amount. So, if you’ve pulled a £50 envelope, you transfer £50 into your savings. Other people withdraw the actual cash and save that in their envelopes – so if seeing this in person would make more of a difference to you and you feel safe doing that, could be worth a try too.
If you are in desperate need to get on the property ladder and you have friends or family members willing to help you out, you may be able to look at the guarantor scheme. This works by having someone there who is able to cover your mortgage repayments if for some reason you are no longer able to. This works well for people who don’t have enough income to qualify for a mortgage on their own. As with anything, there are downsides too. It is a huge commitment for the guarantor to make, as they could end up liable to repay a substantial amount of money and even face late fees!
If you’re in rented accommodation whilst you save and want to find out about ways to make it feel more like a home, why not check out our blog on Ten ways to transform your home on a budget.