Thinking of starting to save up your very first house deposit? Read on to find out some tips and tricks to get started…
Saving up a house deposit can certainly feel like a mammoth task when you’re a budding first-time buyer. Your solicitors in Tonbridge, Torquay, Tiverton, or wherever else you live in the UK, will be able to help you with the conveyancing side of things. But first, it’s down to you to come up with the money for your house deposit.
The problem is, this is easier said than done. So, if you’re looking for some tips to start saving, and some options for where to save, read on…
How to Save Up a Deposit
First thing’s first, let’s talk about the ways you can change up your current lifestyle to save up your deposit. Although there are various means to save up, some of the main strategies could include:
1. Save Money on Pay Day
Your first port of call, when you begin saving up your house deposit, is to start getting into the habit of saving money on pay day. This is the moment when your monthly pay cheque enters your account, making it look pretty healthy.
A great way to ensure you do this every month could be to set up various standing orders. Once they’re set up, the money will leave your bank account automatically, so you won’t even have to think about it.
This should help stop you from spending too much money without a care in the world.
2. Have Multiple Bank Accounts
A great method to help you to efficiently save money on pay day is to open up multiple bank accounts for various reasons. This will help you to distribute your money where it needs to go on the day you get paid. Some suggestions for bank accounts to open include:
- A current account, where your monthly pay should arrive, for everyday expenditure.
- An account where you put your budget for your regular outgoings, like rent, bills, and food.
- An account for your generic, extra savings.
- A special savings account for your house deposit, whether it be a Help-to-Buy ISA account, a different type of saving account, or just a general account.
Simply pop the money in the right account as soon as the money hits your bank account, and you can rest easy that you won’t overspend.
3. Maintain Good Spending Habits
The above processes should help you to begin. That said, you need to start developing good spending habits to keep your monthly expenditure down. You also need to practice self-discipline to ensure you don’t dip into your various savings accounts as you please.
To do this, you should set yourself a budget for each aspect of your life. Whether it be meals out, public transport, shopping trips etc., planning your expenditure can really help you to stay in control. You don’t need to live like a nun to save up; you can very well treat yourself each month if you plan for it in advance.
With any luck, saving up and being frugal should only take a few years. Then, once you’re on the property ladder, you can get back to spending as normal.
4. Consider Moving Somewhere Cheaper
The pandemic has changed the picture a lot for young people saving up their deposits. Now, rather than having to live in big cities to travel to work, working from home is a possibility. This means moving away from these more expensive areas could be possible, and you could even move back in with parents, if the situation allows for it!
This new way of life makes it much easier to live somewhere a lot cheaper to allow more of your pay cheque to go towards your saving goals.
5. Plan Your Meals
This one might seem a little out of the blue, but trust us, it works. Meal planning is an amazing way to save money, as you can plan what you’re going to buy at the shops, stopping you overspending on food. Simply grab a pen and paper, and a cookbook, choose your daily meals, and get your shopping list ready.
This should not only stop you from overspending on your shop, but should help you to avoid relying on takeaways too much.
6. Set Achievable Goals
Sitting down and planning your goals is a great way to manage your savings, helping you to work towards a bigger picture for a certain date. By taking into account your compulsory expenditure, and seeing what you have left and what you can feasibly save up, bigger goals can be planned.
Remember, making sure these goals are manageable is essential to help you feel like you’re really achieving something, and to keep your mindset positive.
Where to Save Your House Deposit
Now we know some effective ways to save, where should you put this money? Well, we’ve already touched upon setting up multiple bank accounts for your various outgoings and savings. We’ve also mentioned ISAs, so let’s dive into these a little more:
- Help-to-Buy ISA: although you can no longer open up one of these, you might have opened one before the deadline. Saving here will mean you can get a government grant of up to £3,000 to help you get on the property ladder.
- Lifetime ISA: anyone between the ages of 18 and 39 can open up a LISA, a place to save up to £4,000 each year as a lump sum or by putting cash in when you can. When you come to remove the money from the account, the government will grant you a 25 percent bonus on top of this.
- Cash ISA: a place to save your money where you don’t have to pay tax on your interest.
The great thing about ISAs is that there is often a limit to how much you can save each month. There are also sometimes penalties for removing cash, which means there’s more of an incentive not to spend. What’s more, you don’t have to pay tax on any of the interest you earn.
That said, finding a general savings account with good interest rates is also an option. It all depends on whether you’d like to make the most of the government grants out there.
Ready to Start Saving?
As you can see, there are places and ways to save up your house deposit. Although it’s certainly not easy for people these days, there are ways to accomplish it.
We wish you luck in your endeavour to start saving!