The deposit for a house is usually what you have to put down as an initial payment to apply for a mortgage. It usually sits around 10-20% of the value of the mortgage/property. So the average price of a home in the UK at the moment is £234,853. That means if you are going for 10% that comes to £23,485. Bearing in mind the average wage in the UK sits around £36,000 a year. Which means saving to £23,485 as a lump sum is quite a lot. So if you take out all your bills, rent, food and social spending; what do you have left?
If you were saving 10% a month, after tax you would have around £2583 a year (hugely depends on your personal tax code, pension contributions etc). So to get to the required deposit you need to save for around 9 years.
Wages are increasing, the average wage was £29,000 last year. This means it is getting better for people. So there is hope, 6.5 years is not too long and can be helped if you are doing it with a partner.
So tips for saving for your first home, or even your next home.
- Switch bank account. There are lots of perks for switching accounts. Some banks offer cash back for switching, or even cash for putting money in there each month, or high interest rates for a certain time. It’s not a huge amount but it is a good start.
- Look for deals. You don’t have to be a social pariahs, but if you look at 2 for 1 deals, coupon meals, go on special nights (curry night in the pub etc). You will find that saving is a little easier.
- Switch energy providers. This is a simple one, you are probably most likely paying a little bit too much if you have been with the same provider for years. Get it changed, the energy market is much more competitive than it used to be.
- Get rid of short term debts. Credit cards, short loans, PCP deals etc. These are all at high interest values, so if you are able to get rid of at least some of these, if not all of them, then this will save you money in the long run. Even if it means not saving for the first couple of months, if you are able to clear those debts it will help.
- Get rid of things you don’t need. Do you need all those computer games, all those clothes, all that furniture, all those kitchen gadgets. Anything you have not used in a year. Sell!
- Follow the people you like to buy from on Twitter or on their social channels. Most will advertise their deals through these channels and you can get your hands on them first.
- Can you get it for free? For things like white goods and furniture you might be able to get them for free. There are websites like Freecycle where people are selling all sorts for free. So if you desperately need that sofa or fridge, get if for free!
- Plan your meals, take food into work, it really helps. If you are getting a little meal deal every work day, is it really worth it. You genuinely could make better sandwiches at home.
- Get rid of the services. Netflix, Amazon Prime, Xbox game pass, Gousto… All of these services, cost money. I’m not saying get rid of all of them, but limited yourself. Set a budget – £20 a month, so what can you lose.
- Get into the saving spirit. This is about mind set, you need a budget for the week and then the weekend. Take that out in in cash, once it is gone, it is gone.
You cannot just do one of these things, it needs to be a multitude of little things that result in you making those savings. And that means you can put away your 10% every month.
And really they should be habits you keep for life, throw off those consumable traits and look at saving 10% every month for the rest of your life. You could even put it into a pension!