4 Money Saving Tips I Followed to Buy a House at 23.
Saving money is hard. But I want to make it easier for you.
Regardless of how much you want to save and why, consistently putting money aside while also managing all of your expenses is really tough. And I’ve been in that position more than once.
The most prominent example that I wanted to share with you is when I saved for my first home. I decided at a very early age that I wanted to buy my own house. Partly because I didn’t enjoy living at home (what 16 year old does), and I craved the independence. I also love interior design and the thought of styling my own home was a dream come true. So, how did I manage to save enough for a $500k property? Let me share some tips:
(I also want to preface this post by saying these tips can be applied to any savings goal, whether it is to buy a house, car, fund a holiday or buy an engagement ring).
Out of Sight, out of Mind
Now I’m not claiming to have come up with this strategy, but I did put my own spin on it. I am going to assume that most of you have at some stage setup a second (or third) bank account in an attempt to move money out of your daily spending account and into a less accessible account. I am also going to assume that like me, you would often indulge and dip into that set-aside money and transfer it back into your daily spending account - sound familiar?
Well my workaround for this dilemma was sending the money to someone else, in my case my mum. As soon as I got paid I would transfer I set amount of money to her account. Every time I would open my bank account I wouldn’t see that money so I naturally forgot about it. It was also a lot harder to access. If I wanted to transfer some money back into my daily account I had to ask my mum and often justify (either to her or myself) why I needed it.
I’m not suggesting you transfer money to just anyone. Consider who in your life you trust and who is willing to support your saving efforts as your personal piggy bank.
Take a Look in the Mirror
This tip came from my dad, and while I was initially offended, I’m eternally grateful. He suggested I print out my last six-monthly bank statement and take a look through my spending habits. Now I will warn you this is a very confronting activity, but I think it’s important to be brave and honest with yourself when you decide to start your savings journey.
As a visual learner my approach involved digging out my favourite pastel highlighters and categorising each expense as either:
essentials (non-negotiables like my phone bill and groceries)
beauty (nails, brows, hair)
memberships/subscriptions (gym, Spotify, Audible)
leisure (going to the movies)
eating out
miscellaneous.
As I went through and highlighted each line it became very apparent where I liked to spend my money and where I could cut down. For me, eating out was the biggest problem and I would always revert to a purchased meal over home-cooked.
Once I did a stocktake of my spending habits I was then able to create an honest and realistic budget. Which brings me to tip number 3.
Rule Your Wallet
I am confident that every single one of you has at some stage created or attempted to create a personal budget. I think the reason so many of us fail at sticking to a budget is because we don’t actually assess our habits, hence why step 2 is a MUST.
Once you understand your actual spending habits, you can create a realistic budget. Now I want to make this clear, saving money isn’t easy, and if it was, everyone would have stacks sitting in their bank account. The reason I want to make that unmistakably clear is because when you create your budget you need to be ruthless. If your goal is to save $20k in 6 months but your spending habits won’t get you there, you need to make cuts.
For me I knew I needed to make substantial changes to get me to my goal - a house with a settlement date I couldn’t change. So when it came time to creating a budget I looked at my spending habits, and each category, and came up with a monthly cap. I didn’t just pull random numbers out of my head. I did some serious thinking about what was realistic and what I would actually stick to, not what looked good on paper.
I also made sure to leave room for things that may not be ‘essential’ to someone else, but were for me and my mental health. For example, socialising and seeing my friends was an important contributor to my mental health, so I created room in my budget to have a meal with my friends once a month.
So when creating your budget, be realistic but be ruthless. Be honest with yourself and commit to a goal.
Sharing is Caring
The final tip I want to share is a personal favourite.
We all have a million different subscriptions - some more important than others. Personally, Spotify, Netflix and Audible are a few of mine. I quickly learnt that a lot of other people in my life also used these platforms and rather than each paying for a subscription, we each paid for one and shared the service with the rest.
Some platforms have this feature already embedded like Spotify, others you can be more creative with.
Saving money can be hard, but I hope these tips make it a little easier.
I have plenty more tips and can share them in more detail if you’re interested. A mindset shift is also crucial to your money-saving journey, and I’ll cover that in another post.
Until next time,
G