10 Reasons You Can’t Seem To Save A Deposit (Ep297)
Saving a deposit can be really hard. Here are 10 reasons why you can’t seem to save a deposit and what you can do about it.
Hey guys! Welcome to Section 1 the Deposit Dilemma and this is Lesson Number 1 – The 10 Reasons You Cannot Seem To Save A Deposit.
I thought that from the very outset, from the get-go, from the very start that we should look at some of the things that are holding you back from saving a deposit. Some of the things that are making it hard for you to go out there and save your deposit because let us face it, there are forces acting against us to make this a difficult task. And if this task was easy then chances are you would not be doing this course and you would not need my help to save your deposit.
But the fact is there are things out there that are making it difficult so by identifying these things that are making it difficult, you can then develop a strategy to try and counteract these forces to make saving your deposit a little bit easier.
Let me just say that every single person is different like you are different to me, different to my wife, different to Bob down the street. Everyone is different so the things that are holding you back from saving your deposit might be different to the things that are holding me back and the things that are holding Bob back or whoever it is. So I am going to go through this list and with most of the lessons in this course, the goal is not to say everything applies to you but is to say we will go through this list and what does apply to you and what can you take away from it.
So do not try and take away every single thing. Do not write notes like a crazy person. Just try and think, Okay well, what affects me the most and what are some things that I can do to begin to counteract that? Alright, let us get into it. The 10 Reasons You Cannot Seem To Save A Deposit.
The first, reason number 1, always is that consumer culture. It is very difficult to save a deposit when our culture is constantly saying spend, spend, spend! Buy this! Buy that! Fashion is constantly changing so you need to update your clothes. There is keeping up with the Jones’ where you need a bigger house and a bigger car. And this constant desire to improve our status through the things that we are buying. That may even be part of your motivation to save and buy a house so that you can improve your social status or so that you can feel better about yourself because you bought a house.
That is a part of our consumer culture that is telling us to buy a lot of these things. I have a lot of consumer things – we all do. I have an iPhone 6, charging it at the moment. I have this Audio-technica headphones, they cost me $250 or something like that. There are so many things that vie for our attention in our consumer culture and try and get us to spend so it is important to be aware of this, every single day you are going to be shown advertising, shown messages to try and get you to buy things.
I do that with my stuff. I put up free content, I try and help people with free stuff but at the end of the day I have to make some money to pay for my family so I do market my products and if you are doing this course chances are you probably purchased this product. There are always consumer things vying for your attention, vying for your money. And that is something that is going to hold you back and something that you cannot completely disconnect yourself from.
There is always going to be consumer culture out there. But you can change your mindset around being happy with less, being happy with what you have and that really starts with just being grateful for the position that you are in and stop trying to be someone else and stop trying to reach for that person at school, the other parent who drives another car and who has a nicer house. Be happy with what you have and appreciate what you have.
That is the best way to counteract consumer culture. I am not a complete expert in it. I still spend more than I would probably like but that is holding you back definitely. So be aware of that.
The second thing is that maybe you have never actually tried to save a deposit. That is a pretty big reason that you have not saved your deposit yet because you have not actually sat down, thought about this and actually tried to save a deposit. Saving is a skill. Saving is not something that you are just either good at or not.
It is not something that happens overnight. We like to think that we can just switch on savings, Okay, I am just going to save a deposit in the next 12 months, let us just switch that on and I can instantly do that. Saving is a skill and being able to live with less and being diligent enough to save is a skill that comes over time. So if you have never tried to save a deposit before or never tried to save a lump sum of money before, it is going to be more difficult for you than it will be for someone who is constantly used to saving, maybe they are saving for holidays, saving for a car, saving for an investment property.
If you have constantly been saving throughout your life, it is going to be easier for you than someone who has not saved at all. So just think about that. If you have never tried, go easy on yourself. It could be hard in the beginning. You might want to start out small, get used to get in the habit of saving and then build that up to start saving your deposit.
Third thing that may be holding you back is you do not know how to budget. There are a lot of different ways to budget. There are a lot of websites out there that talk about budgeting. In fact there are personal finance blogs that almost exclusively talk about budgeting and how you can spend less than you earn. There are many different ways to budget way down to the granular level where you are itemizing every single thing and you are saying, This week, I have $10.50 to spend on coffee, I have $11 to spend on lunch, I have $20.50 to spend on entertainment or whatever it may be.
You can get super granular with your budget or you can do what I do which is we give ourselves a weekly allowance. So we take our income. We pay our bills – the regular things like internet, our phone bills, our rent, our electricity, that sort of stuff, like things that you have to pay every single week or every single month. It is kind of a non-negotiable. And then what we do after we have paid that we then give ourselves a weekly living allowance, maybe $500, $600, something like that. And then we have the discretion and the ability to spend within that weekly allowance. So 1 week we might want to spend more on groceries to make food at home for cheap so that we can spend money going out. Or maybe we do spend money going out so that we are not buying less grocery. That does not make sense.
Anyway, you know what I am saying. 1 week we might spend more on groceries, 1 week we spend less on groceries. 1 week we might go to the movies, 1 week we might eat out. We have the flexibility there to spend our money whatever we want as long as we stick within our weekly allowance. We found that really works for us. You need to find what works for you. As I have said before, everyone is different. You are very different to me. I am very different to you. You need to work out what works for you. But if you do not know how to budget, that is going to be pretty hard to save a deposit. You need to out on budget. That is going to be a fundamental thing towards saving a deposit. If you do not know how to budget, get out there.
Read some articles on it. Go on YouTube. Google how to budget or link up below in this post, the episode that I did on weekly allowances so you can check that out if you think that sounds like it may work for you. So if you do not know how to budget, you can start working towards learning how to budget and again that is a skill that comes with time. We need practice.
Reason number 4 is that you do not save your money first. So reason that you may not be able to save your deposit is that you have said to yourself, Look, I am going to try to be super good! I am going to be Jesus when it comes to spending money during the week. I am just not going to spend anything. Whatever is left over at the end of the month, I am going to save that. And I am going to have my deposit super quick because I am just not going to spend anything. Well, chances are is that there is not going to be much left over at the end of the month. Things come up. You have a car repayment.
You have friends going out to the movies and you want to go as well. You are out for dinner and you decide you to shout everyone or you decide to buy a case of beer this week because it has been a hard week and you just need that gold elixir or something like that. Things always come up during the week or during the month that strips your money away if you have it. However if you choose the strategy of I am going to get paid and then I am going to save first – before I pay my rent, before I pay my electricity, before I pay for food, I am actually going to put that money away in savings and treat that like a non-negotiable expense and then try and live off the rest, that tends to be more successful for a lot of people.
So if you have been in the habit of trying to save whatever is left well, that may be holding you back from saving your deposit. So if you do not save your money first, that may be holding you back. So something you consider, make it a non-negotiable and try and live off the rest and we will talk more about this in future lessons as well.
Reason number 5 is that you do not actually earn enough money. Going back 3 or 4 years ago, I was working 4 days a week, low income job. I was earning like $28,000 a year or something like that. We did not have any kids at that time – maybe we had 1 kid. Anyway, $28,000, not a huge amount of money, I think my wife was only working 3 days a week so she was not bringing home a lot of money and so we did not actually have much money.
We were not earning a whole lot of money so it was very difficult to save when you cannot afford to pay your bills, when you cannot afford to pay your car reg or your car insurance, when you cannot afford to pay for medical bills when they come up. If you do not earn enough money then that is going to hold you back from saving your deposit.
We are going to talk about in the future how to lower the amount of the deposit you need to save so even if you are a low-income earner it is still possible for you. But not earning enough can definitely hold you back and you may want to focus on trying to earn more money either through a side business, through advancing your career, through switching jobs or there is a myriad of other strategies to increase your income. But we do not earn enough sometimes that just makes it hard to save a deposit.
Reason number 6 is that you are an emotional spender. We are all emotional spenders to some level, some of us more than others. If you are feeling down, you have had a bad day, let us go to the shops and let us spend money on food or let us spend money on take out or let us spend money on clothes or let us spend money on technology. Maybe you are an emotional spender and you just spend money when you really should not spend money on things.
I think I have about $500 worth of Nintendo 64 gear that I do not use, that I should probably sell. Was that an emotional purchase? You know, kind of but we are all emotional spenders to some level. But being aware that you are an emotional spender, trying to identify the places where you spend emotionally and go above and beyond on what you should do. Try to be aware of that and try to counteract that by not putting yourselves in those positions or finding a way to make yourselves feel better when you are emotional can really help you towards saving your goals.
Because what happens when you are saving your deposit – you are doing 12 months or 24 months or whatever it may be, if you are an emotional spender, you are holding back and you are delaying gratification for so long that you can just get so tired, so hard and you can just get to the point where you are like **** it, I have been working so hard I deserve to buy the new iWatch, the gold one, that is $24,000 or something. You are probably not going to go to that extreme but you know what I mean.
You have been in a situation where you are trying to save and you say, Men, it has just been so hard and I want to splurge. That is an example of emotional spending. If that is you, you need to be aware of that. We will talk about ways to be happy while you are saving your deposit and hopefully we can counteract some of that emotional stuff in that lesson. So if you are an emotional spender then you might want to go towards that section.
Reason number 7 is that you do not have a goal that you are striving towards. You do not know exactly what you are trying to save. Is it $20,000, $40,000, $100,000? What is it that you are trying to save and in what time frame? If you do not have a goal, you do not have something that you are striving towards, something that you are moving towards the chance of you achieving it is pretty slim because it is like in Alice in Wonderland where she said to the cat, Which way should I go? And he was like, Where are you trying to go? And she said, I don’t really care and he said, it’s like it does not really matter which way you go then. The same with your goals, if you do not have a goal it does not really matter to you whether you save your deposit or not.
You are very unlikely to save it. And by having a goal and by writing it down – psychological studies have showed that when you write it down you are way more likely to achieve it than if you just think of the goal or if you have no goal at all. Definitely get a goal that you want to achieve, write it down, put it somewhere you will remember, make it a part of your life and you are more likely to save your deposit.
Reason number 8 is you do not have a reason to save. This is a bit different from a goal. A goal is a figure that we are striving towards in a set period of time. A reason to save is like Why are you saving a deposit? Yes you want to buy a house. But why do you want to buy a house? Taking a forward to the nth degree.
What is the lifestyle that you want to achieve? What is the impact that you want to have on the world? What is this deposit leading you towards? So your goal is you want to save your deposit, $40,000 in the next 12 months. But then your goal is to own a house because living in that house provides security for your family. Provides you financial security moving forward it means you are not going to get kicked out of the property that you live in. It means you can make improvements to improve your financial situation. It means you can leverage that to eventually achieve financial freedom.
So by having that end goal in mind, by having a reason for doing what you are doing, can make it easier to save your deposit and to delay the gratification because you know, it’s gonna be so good in the future, it’s gonna be amazing, when I’m financially free and I can live the life that I want. If you do not have that reason it is going to be very difficult to save that money and move towards that because you are like, I’m saving it, my life sucks right now I’m just gonna go and spend that money to make that life better.
Reason number 9 is your goal may be too big. This is an example for a lot of people especially with the way that the property market is going, up and up and up and up and up. The property market is just exploding in a lot of areas especially like Sydney and Melbourne. It is getting super expensive in order to live in those cities. I think the recent statistics that I saw for Sydney was like 12 times the annual median income of someone in Australia.
That is how much people are paying for properties. It will take you 12 years to pay for a property even if you did not have a loan on the median income of Australians. Property is really expensive and if your goal is too big even if you are a diligent saver, it is going to take you ages to get there. But for most of us who do have emotional spending habits, we are not going to save perfectly every month, if our goals are too big then we are just going to lose heart and just feel like This is just not achievable and it’s just gonna take me too long I might as well just give up.
So by luring your goal initially to get into the market you could still have the dream house as the end goal for later down the line. But having incremental steps of first buying a cheaper property to luring the deposit that you need – we will talk about that in a future lesson, luring the deposit that you need, making something more achievable so you can achieve it in 12 to 24 months. That is going to help you save your deposit and be more motivated because it is going to take you 5 to 10 years to save a deposit, how motivated are you today for something that is 10 years in the future?
Reason number 10 is that you and your partner are not on the same page. I am guilty of this, as guilty as anyone. I and my wife have been in situations where we really were not on the same page financially. I had the vision of I am just going to eat baked beans and we are going to live off the smell of an oily rag, absolutely no money in order to save the deposit and move forward. And then she has a vision of her life where she did not grow up with a lot of money in her family so there is a level of lifestyle that she wants to be comfortable with and wants to enjoy. And so when I was trying to spend no money and she was trying to achieve a certain lifestyle – not extravagant, not crazy. But when you are working against each other, it is not really going to work, lots of fighting.
No good outcomes emotionally or financially because you are just not on the same page especially when I am the one earning the money but because she is at home taking care of the kids she is the one spending the money. And if you are not on the same page it is just not going to end well. So if you and your partner are not on the same page, that could be holding you back from saving your deposit and you would need to sit down together, get a vision, get a dream for what you both want your life to be like. Compromise.
Think about what suits both of you, how can we move towards this in a way that suits your needs and suits my needs as well and so we can work together. Get on the same page with your partner, with your spouse or whoever it is you are investing in, make sure you are moving in the same direction. That is going to help you save your deposit as well.
There you have 10 reasons you cannot seem to save a deposit. That is not a fully conclusive list. I am sure there are many other reasons why people cannot save their deposit. But what about you?
This course is all about you. It is about your life. It is about helping you save a deposit. So which of these 10 do you feel resonated with you that you need to begin to counteract in order to begin saving your deposit?
Let me just go through them again and just try and think of the number 1 thing that is holding you back the most, just 1. We are not going to focus on 4 or 5 or 6, just 1 because if you can just focus on 1 and improve that, later in life you can focus on another one, but just the biggest one.
Number 1 is consumer culture. Number 2 is that you have never actually tried to save a deposit so you do not have that saving skill. Number 3 is you do not know how to budget and you need to learn to do that. Number 4 is you do not save your money first and you just try and save what is left over. Number 5 is you do not actually earn enough money. Number 6 is you are an emotional spender. Number 7 is you do not have a goal that you are striving towards. Number 8 is you do not have a reason to save. Number 9 is that your goal is actually too big. And then number 10 is that you and your partner are not on the same page.
So which one resonated with you? What is holding you back from saving your deposit? Try and work it out and then try and think in your mind, decide on the 1 which is biggest for you and think in your mind, Okay, this is obviously an issue for me.
How can I counteract that? And you are going to need to come up with those ideas yourself. We will talk about a bit about those sorts of things but we are not going to go in depth on every single one of these and how to deal with that so it is up to you how to begin to think in your mind, how can I work against this force that is trying to stop me from saving my deposit.
That finishes off lesson number 1. In lesson number 2 we are going to talk about some of the things that you can do if you cannot actually save a deposit right now. Maybe some of you are in this situation and you are not just ready to save for a deposit, you do not have enough money or the situation just does not call for it. So if you feel you cannot save a deposit right now, we are going to talk about some things you can do to move you closer towards your dream of owning property.
Until next lesson guys, stay positive.