How to Save up for a Deposit

If you are looking for a home, either to buy or to rent, you will need a deposit to put towards it. If you rent, the deposit is likely to be a good few months’ rent and if you are buying then it will usually be about 5% of the cost of the property. Buying will require significantly more money than renting. However, it can be equally tricky to save up for each, depending on what methods you plan to use. There are things you can do though, which will make saving up easier.

Set up a savings account

It is wise to start by setting up a savings account specifically to put your deposit money in. This will make sure that the money is kept separate and that you do not accidently spend it on something else by mistake. You will also be able to easily see how much the money you are saving up is going up or perhaps how slowly it is increasing. This could help you to know whether you need to work harder to get your deposit together more quickly.

Pay in regularly

It is wise to pay into your savings account regularly. If you set up a direct debit to go out on the day you are paid, then you will know that you have the money available to do this. Make sure that you set it up for an amount that will add to your deposit as much as you can afford without leaving you short of money when you need it to pay for other things. It can be tricky to get this just right if you guess, so you may have to look back over previous bank statements to work it out. Most people would rather wait until the end of the month and see what money they have left and just transfer that into their savings account. Although this is better than not saving at all, it is wise to do it at the beginning of the month as then you will be sure that there is some money there. If you leave it to the end then you may have spent it all. However, by transferring it early you will not have the money available to spend and you will have to budget more carefully.

Analyse Spending

It can be really useful to analyse the sorts of things that you are spending money on. We all have things that we have to pay for, but often we will buy lots of things that we do not really need. It can be fun to treat ourselves to all sorts of thigs or to pay a bit extra for things so that they are nicer. However, if you are saving up for something, then it is wise to not do this. If you can cut down here, then you should be able to free up a lot more money for paying towards the deposit.

Keep Motivated

If you are saving for a long time, then keeping motivated can be a problem. It is worth thinking about what you might be able to do to help yourself. It could be good to write down your goal and put it somewhere that you will look at every day so that you will be able to keep reminding yourself as to why you are doing this. It can also be useful to get others to help you and remind you. Perhaps if you are moving in with someone then you could work together on it.

So, although spending less and saving up would be the most obvious things that you need to do in order to save up a deposit, it is important to make sure that you are doing this effectively. Staying motivated is really important and if you set up a savings account and pay into it regularly, it can make the whole task a lot easier. Obviously, making sure that you change the way that you spend so that you have more money available is important as well. It can be a big effort with lots of changes required, but this will be worth it once you are able to get the home that you are aiming towards. It is also worth remembering that the more money you are able to save, the better a home you can get. With a rental you need to be careful as you do need to make sure that you will be able to afford the rental each month. With a mortgage, if you are able to save up a bigger chunk of money, it means that you will either be able to get a more expensive property or you will be able to pay off a bigger chunk of the property and therefore get a lower mortgage.


Where to Cut Down Spending to Keep on Top of your Mortgage

If you are struggling to pay you mortgage then there are things that you can do. It might feel that you just have too much to manage and if you have other loans as well then you may feel like you are spending too much on these and do not have anything left for other things. It is worth analysing your spending though as it could be that you will be able to reduce what you are paying out for all sorts of things and this could help you to manage a lot better.

Reduce mortgage and loan costs

To start with, you might find that you are paying more than necessary for your mortgage and loans. If you can get the costs of these down, then you might be able to make things easier without changing anything else. It can be worth comparing prices to see whether you can change, either to a different way of borrowing with the same lender or by changing to another one. It is worth noting though that you may have to pay a fee to swap lenders. Ask your current lender about this and then you will be able to allow for this cost when you calculate whether this is a good idea. You can compare the costs using a variety of methods such as comparison websites, looking at individual lenders sites and going through a financial advisor. These all have pros and cons and you will need to find the method which works best for you.

Compare costs of utilities, contracts and subscriptions

Most of us have regular payments that we pay out, usually by direct debit. These tend to be for utilities such as gas, electric, water and subscriptions such as television and broadband and well a contract such as those for our mobile phones. These can add up to a lot of money and it is worth reviewing them. Firstly, think about whether you really need the all as you might find that you will be able to save money by just cutting some of them out. Also, you might be able to change to different suppliers and save money. Compare the costs of alternatives and you might be able to switch when your current contract comes to an end. It might even be possible to swap some right away and begin saving money immediately.

Compare prices on food and travel

Other things that we all buy include costs of travel and food. We may be able to save money on these as well by finding cheaper alternatives. Using cheaper supermarkets and buying cheaper food products can help a lot. Also only buying enough food, rather than buying snacks and things we do not need or food that we end up wasting as we do not use it until it goes off could make a difference. Consider how much you travel and whether you can reduce your transport use and walk or cycle more. Also see whether it is cheaper for you to buy petrol elsewhere or to travel using a different and cheaper means of transport.

Budget carefully for luxuries

We all buy things that we do not really need. However, we could still do this on a budget and just limit how much we buy. This would help us to manage better. It is good to start by working out how much we spend on doing this and then we will be able to decide how much we would like to cut down. You can work this out by looking at your bank statement. You will be able to see what you buy and how much you spend on it. However, if you use cash, it is harder to see what you have spent it on, so you may need to go a few months noting down what you are buying which will help you to know how much you are spending and what you are buying.

Hopefully, you will find that as there are a selection of options here that you will be able to try that will enable you to spend less. Some of them will take a bit of research, but once they are in place, you will not need to think any more about them. Others will take more constant adjusting but they really could help you to change the way you spend and benefit long term. If you can get all of the family involved in helping you as well, then this can be a big benefit. It can feel really hard if you are cutting own and no one else is and so if you can ask everyone to budget then you will all be able to spend less and there could be significant savings that will make the mortgage easier to manage. You might even find that you will be able to spend so much less that you will have some left over that you can put towards paying off your mortgage or other loans that will save even more money.