Its My Home : 2017
17 16 IT’S MY HOME IT’S MY HOME T ammy Barton (formerly May) is founder and director of MyBudget, Australia’s leading personal budgeting service. We asked Tammy to share her tips for saving for a home deposit faster and what to do if financial stress is getting between you and your dream of homeownership. Buying a home is the biggest investment most people will make in their lifetime. On the most part, the process is exciting and rewarding, but it can also be stressful and daunting. Saving for a deposit can be especially challenging when property prices and the cost of living seem to keep rising and there’s already a barrage of competing demands on your income. How to SAVE FASTER FOR YOUR HOME DEPOSIT THE PATH TO FINANCIAL FITNESS ALWAYS BEGINS WITH BUDGETING The first step to saving for a home deposit is to work out how much you can afford to save. For this you’ll need to create a detailed, long-range budget. Now, when most people create a budget, they base it on their pay cycle. That’s a great start, but problems often arise when intermittent or unexpected expenses pop up. The budget can quickly slide into deficit because there wasn’t money set aside for, say, Christmas and birthday presents, vehicle rego or the dog’s annual vet check-up. A detailed 12-month budget will anticipate all of your expenses and show exactly how much surplus is left over to save. KEEP YOUR SAVINGS IN A SEPARATE, DEDICATED BANK ACCOUNT The safest place for your savings is in a dedicated account or sub-account where you can’t easily access the money—it’s certainly preferable that your savings can’t be withdrawn via ATM. Keep your savings instead in a no-fee, non-transactional account. When your balance gets high enough, you may wish to transfer some of the money into a term deposit where you can earn a higher rate of interest. The best bet is to have your employer disburse part of your pay directly into this dedicated account so that the money never touches your pocket. Having a regular, reliable savings history will also be regarded favourably by lenders when it comes time to apply for a home loan. PAY YOUR BILLS ON TIME As well as looking at your savings history, lenders will access your credit file to assess your creditworthiness. In addition to any defaults or insolvency, they will be interested to see if you pay your bills on time. Many people don’t realise that creditors, such as loan and credit card providers, report instances where customers pay their bills late. Budgeting is a great way to ensure that your bills are always paid on time. REDUCE YOUR DEBTS, ESPECIALLY CREDIT CARD DEBT I’m often asked whether it’s important to pay off all debts before you start saving for a home deposit. The answer will depend on the type of debt you have. In the case of credit cards, cash advances and quick cash or payday loans, these forms of credit generally attract a high CAN’T GET YOUR BUDGET TO BALANCE? When your expenses exceed your income, it may indicate that you need to speak with your creditors about payment arrangements to help you get back on your feet. MyBudget provides guidance on the sorts of arrangements that may be achievable. DON’T LET FINANCIAL STRESS STOP YOU FROM ACHIEVING YOUR DREAMS Financial stress is almost epidemic and affects people from all walks of life and across all income levels. The biggest trouble is that money worries tend to snowball because they cloud your clarity and make it feel like there’s no way out. But there’s always a way out. I’ve never come across a financial situation that wasn’t fixable—and it all starts with budgeting. Detailed, long- range budgeting can provide deep insights into your finances and allow you to explore different scenarios. The best part is that when you gain control over your money, you’ll also gain a greater sense of control over your life and your future! Even if your savings start out small, in time they’ll grow and gather momentum, especially as you pay off any debts and put that extra money towards your dream home deposit. Through my work at MyBudget, I’ve witnessed literally thousands of people go from financial despair to having saved for their home deposit in the space of a few short years. rate of interest. Every situation is unique, but I would generally recommend for you to use your surplus income to pay down these debts as quickly as possible before you start saving for a home deposit. At MyBudget every customised budget plan we create includes a savings plan because we recognise that the only way to beat credit reliance is to create a savings safety net. I’VE NEVER COME ACROSS A FINANCIAL SITUATION THAT WASN’T FIXABLE— AND IT ALL STARTS WITH BUDGETING MyBudget offers a free budget consultation service. A personal budgeting specialist can help to analyse your finances and design a customised 12-month budget plan that is yours to keep. There is no cost and no obligation to join. Visit mybudget.com.au for more information. DON’T KNOW WHERE TO START WITH BUDGETING? Pictures:MyBudget,Shutterstock.