How to save for a house while renting

It’s the great challenge facing countless Australians each and every week: How to save for a house while their rent gnaws a giant hole in their savings. 

Making that task even less attractive is the generally accepted view that in order to stow away enough money to make your home owning dream a reality, your lifestyle will have to pay the price.

But it doesn’t have to be that way. Here are six simple tips and tricks to help boost your house savings while allowing you to still enjoy the life you’ve come to love.

Budget first, save later

Making a list of your expenses and working out a budget seems like the oldest financial advice in the book, probably because it is. Ark Total Wealth partner and financial advisor Chris Magnus said people should take the time to learn where their finances are at, and then save as much as they can comfortably afford.

Do a budget and get a clear picture of where your expenses are going.

“Everyone’s different, but saving 30 per cent (of your income) would be great if you can cope with it,” Magnus says. “But rather than trying to dictate a percentage, do a budget and get a clear picture of where your expenses are going. There are some great tools around. Apps and programs like Zero and Pocketbook will actually give you – by taking data feeds out of your bank account – a clear picture of exactly where your money is going.”

 Do a spot of house sitting

If you don’t mind a sometimes-transient lifestyle, house sitting can be a great way to live in desirable areas for virtually nothing. It’ll cost you a little light maintenance and house upkeep, or a quick dog walk a couple of times a day, but that’s nothing compared to the thousands you’ll be shoveling straight into your savings each month while living rent-free.

 Take away the temptation

Have your agreed savings amount direct debited out of your bank account as soon as you get paid. People who really want to dip into their savings for a pair of shoes or a few beers will always find a way, but putting an extra barrier in place is a great way to remind you about the ultimate goal and keep you on track.

Don’t settle for big bills

You might not realise it, but almost anything can be negotiated when it comes to costs around your rental property. Approach your gas, electricity and internet providers and ask for a cheaper deal. If they want your business (and they do), they may not mind shaving a bit off the top. If not, shop around to find another company that will.

Almost anything can be negotiated when it comes to costs around your rental property.

Likewise, your biggest cost – the rent itself – should be among the first things you try to reduce. Ask your landlord about a rent reduction if you’re prepared to take on a longer lease. They’ll enjoy the peace of mind that comes with knowing they’ve got a good tenant in their property for two years, and you’ll enjoy pocketing the extra cash each month.

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Celebrate your successes

If saving for your house is a longer proposition, sometimes it’s going to seem like a slog. But it doesn’t have to be, and if you’re hitting your savings targets, there’s nothing wrong with a little pat on the back every now and then.

Magnus advises people to make sure they reward themselves along the way. “If your goal ends up being that you’re not going to be able to achieve it for five years, set yourself little points,” he says. “After one year, if you’ve hit your savings goal, include a holiday or a night out to dinner or whatever it is, rather than just crunching through and getting no real benefit from it.”

Reward yourself.

It’s not too hard

Keep calm and remember to breathe. Like any long-term commitment, saving for your first home is going to have its ups and downs. But, Magnus says the silver lining is the new home at the end of the journey, if you’re prepared to tighten your belt when it really matters.

“I think it’s a matter of taking that step back and saying, ‘really, what is important to us?’ and prioritizing those goals,” he says. “When property prices are increasing so much, it’s unfortunate that most people do have to make sacrifices at some stage. If you really do want to buy a property, something’s got to give, so what are you prepared to sacrifice in order to achieve that?”

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