Here are some smart tips to help grow your savings account and financially prepare for buying your first home.
Save 10% of your pay each week
This tip is an oldie but a goodie that works if you’re prepared to stick with it.
Designate one savings account – ideally at a different bank to your everyday accounts to make it harder to access the money – and then transfer 10% of your net pay each pay period. It might mean you have to miss out on a few restaurant meals or coffees throughout the month, but it will be well worth it in the long run.
Pay off your debt
Eliminating debt is not a direct savings tip, but it is by default as you’ll be saving money on interest payments. Paying off your debts makes sense for two main reasons: it will increase the amount of money you can borrow, and it will free up cash to put towards your home loan repayments.
Level up your KiwiSaver
Aim to maximize your weekly contributions to KiwiSaver, up to the 10% limit. Your employer's 3% contribution can significantly accelerate your savings. Additionally, choose the appropriate fund according to your timeline—typically, the closer your KiwiSaver's intended use, the more conservative your investment strategy should be. Seek expert advice for any uncertainties regarding KiwiSaver.
Eliminate luxuries
It’s never fun tightening up your budget, but it’s an effective method for saving money. You can start by removing or downgrading personal luxuries and directing the money into a savings account. You don’t have to skip everything at once, instead, remove one luxury per month, pocket the savings, and then move on to the next one. Over a period of twelve months, you could easily save a few thousand dollars by alternating between life’s little luxuries. For instance:
- Cancel any television subscriptions.
- Take your lunch to work instead of buying it.
- Avoid online shopping.
- Skip alcohol. Your health and your bank balance will benefit.
- Host dinner parties instead of going out.
- Buy some nice plunger coffee and make your own at home and work.
Get a part time job
If you’re serious about saving for a home deposit and your finances are already stretched to capacity, then consider looking for extra work. By working a few evenings a week, you could easily add $1,000 a month to your bank account, or $12,000 over 12 months. Think babysitting, dog walking, freelance writing or graphic design, ortutoring high school students.
This article is for informational purposes only and should not be considered as financial advice. It is always recommended to consult with a qualified financial professional before making any financial decisions based on your individual circumstances.
