For most of us purchasing a house is the most expensive thing we will ever buy, which means saving a deposit will be the largest amount of money we will ever need to save.
Until you work out what you can afford, how much you need to save and how long it is going to take you to to get there, any attempt to buy an investment property is futile.
What’s actually stopping you from saving a deposit?
In todays article we have compiled a list of 10 Things Stopping You From Saving A Deposit.
Based on our clients feedback these are the most common challenges people face when saving a deposit:
- Consumer culture
Society today puts so much pressure on us to be the best and to have the best.
Unfortunately in our culture we tend to get caught up with Keeping Up With the Joneses and often struggle to maintain a strict saving regime.
The secret to property investing is to delay your gratification in the short term so you can have everything you ever dreamed of in the long term.
- Not having experience with savings
If you’ve never had to save for a deposit for a house you’re not even going to know where to begin or how to go about it.
It’s important to identify how much you want to spend on a house then work back from there. Once you know how much you would like to spend, you can then work out what 5-20% of that cost is going to be. Make sure you also factor in stamp duty, taxes and other fees associated with buying an investment property.
- Not knowing how to budget
Budgeting is an art. You can be as detailed or as broad as you want to be when it comes to budgeting, as long as you have a clear outline of where your money is going to each week and how that money is going to help you save for a deposit.
A good place to start is to identify your fixed expenses and how much you have left over at the end of the week.
Whichever approach you take with budgeting, it is imperative that you take an approach that is going to work for you in the long term, so you reach your savings goal.
- Not saving before you spend
This is the most common mistake people make.
Make sure you save first, pay for your expenses second and spend your money on lifestyle last.
That way the money is never officially in your spending account which makes it harder for you to spend that money.
- Not earning enough
It’s hard to begin to save for a deposit if you don’t earn enough to actually allocate a portion of your wage each week to savings.
- Emotional spending
Emotional spending is a big one, and ties back in with the consumer culture that I mentioned earlier. May of us have a tendency to be emotional spenders, and impulsive buyers. These purchase are generally tied to a lack of clarity around our long term goals.
Dont beat yourself up too much, this is the way we have been programmed to think and when we see something we like, we need to have it.
- No specific goal
It’s hard to save for a deposit, and allocate money away each week from your hard earned wage when you don’t have a goal in mind.
Whether you want to save $10,000 or $100,000 you need to be focused on where that money is going to come from and how that money will be saved.
I personally create a vision board and a goals list at the start of each year so I know exactly where i’m heading. Each time I feel the urge to move off track I simply look at the board and re-read my goals and Im re-energised to keep pushing towards my goal.
Having a clear goal in mind is the most important step when starting to save, by not having a goal we face major challenges.
- No reason
To save for a house deposit you need more than a goal, you also need a reason behind that goal – a why.
Your reason may be as simple as moving into your own home, moving to a new area, going on an amazing holiday each year, donating your time, leaving your job or spending more time with the people you care about.
We all have different reasons for the choices we make. The sooner you can find out what makes you tick the sooner you can make it happen.
- Goal is too big
Having a goal that is too big can often be as detrimental as having no goal at all.
You need to choose a goal that is attainable, and realistic. A massive reason why people don’t even begin to save is because their goal is far too big and seems out of reach, so they get a defeatist attitude and don’t bother to begin to save in the first place.
Rather than creating a huge goal, which can sometimes become a deterrent in saving, create a series of smaller, more achievable goals. Psychologically this type of saving is much more successful because you can see progress and stay motivated and focused on your goal.
- Not being on the same page
It is important that the people around you, in particular your partner, are on the same page as you when it comes to saving.
When those around you don’t support what it is you want to achieve, it can become something that stops you from being able to save a deposit.
Make sure the goals of those around you align with yours.
It is important to do some self-evaluation and work out where it is that you are falling short if you are struggling to save for a deposit, and look for help to achieve your goals.
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