Having to save up and set aside the deposit for a new home can be daunting. The escalating costs of house prices and a decrease in supply of housing in already densely populated cities in Australia worsens the prospect of homeownership among many Australians. Saving money for a home deposit takes time, but if you are motivated and goal-oriented, paying a down-payment towards your first home will soon become a reality.
Here are 6 ways to save towards your home deposit:
1. Clear your credit card debt
If you are in debt, you have less money to channel towards a home fund. The first step to take is to clear your credit card debt which will free up your cash towards saving for a home deposit. Pay your debt bit by bit but consistently to eventually free yourself from it. Minimise or stay away from the use of your credit card to avoid getting sucked into a spiraling debt trap.
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2. Save some of each paycheck
Once cleared of credit card debt, the most effective way to save is by transferring some of your pay to a special savings account. Let the money sit in the account and accumulate interest over time until your target amount is met.
3. Increase your savings
It makes sense to accumulate your savings in a high interest savings account with low fees to boost your savings. Ensure that the money in that account is not withdrawn for a period of time to get the most out of your savings.
4. Stay away from using credit
Credit cards may incur high interest payments and other fees if you are not organised with your repayments. If you have a soft spot for credit cards, put them away in a place where they are not easily retrievable, such as in a locked drawer orfrozen into a block of ice in your freezer. Choose to pay by cash instead of the card when you shop for everyday items.
5. Trim away the frills
Tightening your budget is an effective strategy for saving towards your first home deposit. Trimming luxuries such as entertainment, magazine subscriptions and purchasing collectibles can help you save a few thousands of dollars a year. You need to first jot down all the treats you have spent on in the previous year to get an idea of what needs to be eliminated in the current year. An example of some luxury spending that might be cut down chould look like this:
- Magazine subscription – $49.90
- Lunching out – $520
- Coffee – $130
- Entertainment – $480
Based on your luxury spending figures, you can add up the amount you could save by cutting down on treats.
6. Take up freelancing
By working a few extra hours in the evenings and in the weekends a week, you can channel extra money to your savings account on a monthly basis. Think of a skill you have that you can offer to others such as freelance writing, website design, teaching English to foreigners and data entry. The amount of money you earn will, of course, depends on the number of hours you are willing to put in after your usual work hours.
By following the above-mentioned tips conscientiously, accumulating sufficient cash for your home deposit will soon be within your reach. Be patient and persistent in achieving your goal and you will realise that through determination and consistency in stashing away cash over a period of time, your dreams in owing your first home will be a reality.