Budget Your Way to a New Home

Client: HSBC
As featured in: Huffington Post

saving for a houseIt’s payday. Time to splash out, you owe it to yourself after the week you’ve had eking out the last paycheque. If this sounds familiar, you’re nowhere near ready to become a homebuyer. It’s time for a new way of thinking.

The first rule of saving: every penny counts. If you look at it that way, the obvious solution is to spend only on essentials like bills and food, but no one can live that way. It’s human nature to want the little luxuries, but we also have the capacity for willpower.

When you meet a friend for a drink and she orders food, even though you were planning to have dinner at home, it’s easy to think: what difference will a £12 burger make when I need £25,000? Well, considering the average Brit spends £4,166 a year eating out, and orders 84 takeaways and 64 ready meals a year, that’s another £1,304, if you’re counting, which you really should.

The answer isn’t that you must never dine out. Instead, be selective about which occasions are worth forking out for, find new ways of personal fulfilment that don’t cost as much, and stay focused on the goal: the bigger the pot, the dreamier the house.

And it’s not just a deposit you’re saving for. There’ll be valuation fees, stamp duty, surveyor’s fees, legal fees, insurance, the list is long. You have to pay for everything – nothing is on the house, so to speak…

Accept you’re on a budget, convince yourself that doesn’t mean going without but heading towards your goal, and start saving. Here’s how.

Take It Away Before You Know It

Open a savings account and have a regular amount paid in automatically by direct debit on payday. It doesn’t have to be a huge amount, anything between 5% to 10% of your monthly salary will do, but as well as adding to the pot and making you work with what you’ve got left, it will sit well with your future lender. It goes without saying: don’t touch it. Everything seems like an emergency when you want it and can’t have it…

Start Using Cash

Avoid using your cards, especially credit cards, and pay by cash whenever you can. A pair of £80 shoes doesn’t seem a big deal when you’re chip and pinning it at the counter, but picking out ten pound notes eight times over might.

Think Of Alternatives

Everything has a cheaper alternative. That’s easy in terms of shopping, but apply the thinking to every other aspect in your day-to-day life. Instead of driving use public transport, or better still, bike or walk. Instead of spending an afternoon in a café, go to the park instead. Instead of the big screen, have a movie night in. The important thing is that the alternative, to put it bluntly, doesn’t suck.

Sell Things

Anything you don’t use (take a good look at all those gadgets, instruments and consoles), sell them. If you have a skill you could put to good use, sell yourself! You can make extra money by teaching someone in your neighbourhood how to do it, or set up your online tuition service. Every penny you get, put it towards paying off debts.

Turn It Off

It’s obvious, yet we always forget to do it: turn off the lights, unplug electrical appliances! Reduce energy bills by installing a programmable thermostat to automatically change the temperature when you’re out or asleep, get energy saving light bulbs, lower the temperature on your hot water heater (it doesn’t need to boiling every minute of the day). If you have a tumble drier, give it the summer off.

That’s Enough Entertainment

TV, sports and movie channel bundles are so cheap, it almost seems pointless to cancel them. Except the low cost is how they keep you hooked. Cancel all subscriptions, your gym membership if you can, forego the summer festivals this year, and go easy on your choice of weekend poison. Lenders like to know the person they’re handing over thousands to is healthy.

Can You Downgrade?

Chances are, your phone can match your laptop in terms of power and speed, but it doesn’t have to. You can just use it as something to call and text with, get yourself a significantly lower priced tariff, spend those hours you normally spend playing Ridiculous Fishing reading a book instead. And all your gadgets, apps and grooming products will always promise the new version will be the best yet and make your life so much better. But not as good as your own home, so no thanks.

Get Others Involved

Social life doesn’t have to mean spending money. Have friends over for dinner, make up with the in-laws so they help out more with childcare, get chummy with colleagues to arrange car shares, get loved ones involved in coming up with ideas that help cut costs and being sensitive when arranging costly events. Say thank you by creating personalised gifts.

Get Good Deals

Whether it’s using Freecycle, Groupon or simply realising the ‘buy two for the £5’ deals are a massive con, train yourself to realise the difference between a bargain and a marketing ploy.

Learn To Do Things

If you can’t cook, learn. If you can, learn to cook more at home. Learn to grow your own vegetables, knit, play an instrument, pick up a new language, paint a portrait, try out a new workout in front of the telly. If you’re feeling like you’re missing out because you’re not doing all the fun things that cost money, take heart in knowing you’re becoming a better you for free.

Remember, You Have Willpower

If you’ve given up smoking or anything you were addicted to, you know how this one works. You see something you want – cake, a bag, a trip to the Bahamas – and you tell yourself you don’t need it. Actually, you don’t really even want it. What you want is a house. And you walk away from the counter feeling like you’ve won. And when your lender looks at your accounts and considers you someone who can control their spending, you’ve dealt yourself a full house.


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