How To Budget For Your First Home In 5 Simple Steps

With interest rates and the cost of living soaring, saving for your first home can be challenging. But, if you’re determined to buy, we’re determined to help you get into your first home sooner. Here’s how to budget for your first home in 5 simple steps. 

1. Prioritise Your Spending

Firstly, prioritise your spending. Cut back on unnecessary expenses such as takeaways and alcohol. You don’t have to give it up (if you don’t want to), but limiting your weekly or monthly spending can yield big results for your bank account. 

It also helps to set a budget for yourself for non-essential expenses and give more thought to your weekly food shop. Canstar reported that the price of food rose by 4.3% in the year to March 2022.

They go on to give the following tips to help you save money on groceries:

• Make a weekly meal plan
• Make meals from scratch
• Avoid recipes that need special ingredients
• Always make extras
• Stick to your shopping list – always!
• Use what’s in your pantry, fridge and freezer to avoid buying extras
• Be wary of product placement
• Consider supermarket rewards programs (Flybuys, Everyday Rewards etc.).
• Familiarise yourself with prices
• Look for discounts and bargains (who doesn’t love a bargain?!)
• Keep your eyes peeled for end-of-day reductions
• Buy ugly food (Odd Bunch at Woolworths or I’m Perfect at coles)
• Shop beyond the big supermarkets
• Don’t be too brand loyal 

Don’t forget to factor in the cost of insurance, utilities and maintenance when prioritising your cash. 

2. Take Control of Your Debt

In our early days, we often don’t think twice about how debt can impact our chances of being first home buyers – until it’s too late. It’s easy to forget or fall behind on loan repayments, but a bad credit score can be your make-it-or-break-it moment when buying a house.

Grab all your statements and start by calculating how much debt you have. Knowing this will make it much easier to factor repayments into your budget, and having a goal can be a big motivator. 

Stop paying unnecessary extensions or interest only on your monthly credit cards and loans, and instead focus on paying them off as quickly as possible. Research the different types of credit cards, loans and interest rates, and take advantage of incentives from lenders. Your aim is to pay off your most expensive debt first. 

If you’re in real financial trouble, the National Debt Helpline website can be a big help, or you can even take advantage of their financial counselling service by calling 1800 007 007 or using their Live Chat feature.

3. Cut down on Unnecessary Luxuries

Again, we’re using the word ‘cut down’, not ‘give up’ because for many people, giving up ALL those little luxuries can be demotivating and increase your chances of not achieving your savings goals. If you tend to overspend on things you don’t need, reducing your spending here can help you save for your first home faster. 

Work out how much money you spend each month on:

• Takeaway and eating out
• Entertainment and activities
• Streaming services
• Buy now, pay later purchases
• Fashion items such as clothing, footwear and accessories
• Gifts for friends and family
• Mobile phone data
• Subscriptions

Next, consider how much of this you ‘really need’. Do you really need to buy that new handbag? Do you really need Netflix, Binge, Disney+ and Prime Video? Can you get away with fewer options or use the free streaming services? Instead of going out for Taco Tuesday each week, can you make Tacos at home (here are 21 taco recipes to get you started)?

4. Make a Plan to Budget for Your First Home

What’s that old saying? 

If you fail to plan, you are planning to fail – Benjamin Franklin.

How many times have you heard that one? But, when saving a deposit for your first home – make a plan! You’ll need to work out how much money you’ll need to buy a home, and don’t forget to factor in other costs like stamp duty and conveyancing fees. 

Next, start a savings and expenditure spreadsheet and determine how much you need to save each month to achieve your first home savings goal. Moneysmart.gov.au have a brilliant and FREE budget planner that you can use to work out where your money is going. Simply input the information you’ve already gathered from steps 1 – 3 above. Then, play around with what your budget would look like if you were to cut costs. From there, you’ll have a better idea of how much money you can afford to save each month towards your first house deposit.

Finally, draw up a plan of action, pop it somewhere visible and stick to it.

5. Don’t Panic

It’s never too late to start saving money, and it’s normal to feel stressed or overwhelmed when you’re just starting. On average, first-home buyer couples in Australia take 4.6 years to save a 20% deposit, and it’s important to recognise that it won’t be the same for everyone. 

Remember – help is available for first-time buyers! Check out the following first-home buyer schemes to see if you’re eligible:

• First Home Owner Grants for New South Wales and other States & Territories
• First Home Super Saver Scheme
• First Home Guarantee

Own your first home sooner.

Don’t worry; there’s no one right way to budget for your first home deposit. The key is to do the best you can and watch what you spend. After all, saving money is all about the little things—buying generic brands, cutting costs on luxuries and buying in bulk are also excellent budgeting strategies. The sooner you save up, the sooner you’ll be able to get into your own place—and the sooner you can say goodbye to the ups and downs of renting. 

And, when you’re ready, we’re here to help. Our friendly team will work with you from the moment you decide to save for your first home, until you walk through your front door. We’ll help you navigate the steps involved in buying your first home, providing expert advice along the way and handling all your conveyancing needs.

If you’re unsure where to start, book your free 15-minute consultation today by calling (02) 4056 1070, emailing us at admin@oliverandcoconveyancing or starting a free quote online today.