10 ways to save for a new home while renting

Many Australians looking for a first home buyers loan struggle with this problem: saving for a 20% deposit of the property’s value while still managing to pay their rent and utility bills at the same time. Paying rent and saving thousands of dollars for a home loan deposit simultaneously sounds very difficult, but it’s actually possible if you follow these tips.

Here are 10 tips you can use on how to save up for a house while renting.

1. Set yourself a savings goal

When it comes to saving for a house deposit, it's important to set yourself a goal early. No matter the deposit size you have in mind, saving for something big can be intimidating without a clear goal to help you keep track of your progress. 

Don't just set big goals either. achieving wins with mini goals along the way will help keep you motivated towards your bigger target. 

2. Make a budget and savings plan

Now that you have a clear target, it's time to make a budget and savings plan to help you get there. A savings plan takes into account your monthly expenses like rental costs, home bills, groceries, entertainment and other costs to give you a better idea of how much you can save each month. 

With a budget you can easily track how much you're able to spend on day to day expenses while still able to store some away for your loan deposit.  

3. Build up strong savings habits

To make the most of your budgeting it's important to build up good savings habits to help you stick to it. Think about how you can make changes to your spending habits to help keep you from spending extra money.

For example, keeping track of your purchases your through a spending tracker or if you already have a chunk of money, why not use a term deposit account to prevent the temptation to spend it?

4. Pay off your debts

Before saving up for a new home, tackling your debts with large interest rates such as credit card debts and other personal loans.

You would want to lessen your liabilities as much as possible. Additionally, paying off your debts could improve your credit score, making it more possible to get your home loan approved.

5. Get a roommate

Ask if your friends would want to be roommates with you. Having two or three roommates can significantly help you save money and reduce your expenses easily because you can split the rent and utility bills two or three ways.

6. Create a separate savings account

Another money saving strategy you can do is to create a separate savings account specifically for your house deposit.

This can be a great motivator, because you can easily see your money grow each month. Make sure that you choose an account with a good interest rate and little or no fees.

7. Cut off unnecessary expenses

Sacrifices will need to happen if you’re serious about buying your first home. You may need to get rid of some leisure activities such as dining out frequently, purchasing more than one store-bought coffee per day, or even cancelling your gym membership or one of streaming services you're subscribed to.

Try to live cheap as much as possible, and find ways on how you can compromise. You’ll be surprised by how much money you can save money by cutting off unnecessary expenses.

8. Negotiate your rent

Have you been a long-time tenant? You can try to negotiate with your landlord to see if they can reduce your rent. Decreasing your rent bill even for as little can help add to your house deposit savings account.

9. Earn more

If you want to save up for a house deposit, you may want to look at ways to earn more money. You’re 9 to 5 job doesn't need to be the only source of income you have.

You can look find ways to earn extra such as applying for freelance jobs, selling your pre-loved items online, or  even get a second job if possible.

10. Keep track of your utility bills

Save money by keeping track of your utility bills. For instance, you can invest in energy-efficient appliances and low-flow faucets, turn off the lights when you’re not in the room, or take shorter showers.

For first time buyers, saving up for a house deposit is likely to be one of the most difficult financial challenges faced. But it's important to remember buying your first home will not happen overnight.

This may require a lot of sacrifices, but keep in mind that theses sacrifices will pay off in the future.

Other helpful resources: 

• What is the first home super saver scheme?
• What is the First Home Owner Grant? 
• Buying an investment property while renting

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