Can You Save a House Deposit in 1 Year?
If you’re looking at getting into the property market, the first thing you need to do is save your deposit. And if you’re anything like me, you don’t want that to take an extremely long period of time, you just want to get it done as quickly as possible, invest in property and move on towards your financial freedom journey. But is it possible to save a deposit in just one year?
0:00 – Introduction
0:45 – The 6 steps to working out if it’s possible
1:16 – #1: Work Out How Much You Need To Save
2:05 – #2: How Much Do You Need To Save Per Pay Cycle
2:33 – #3: Is That Actually Possible?
3:15 – #4: How Much Extra Do I Need To Make?
4:05 – #5: What Else Do You Want To Do This Year?
5:45 – #6: What’s Your 10 Year Goal?
If you’re looking at getting into the property market, the first thing you need to do is save your deposit. And if you’re anything like me, you don’t want that to take an extremely long period of time, you just want to get it done as quickly as possible, invest in property and move on towards your financial freedom journey. But is it possible to save a deposit in just one year? That’s what we’re going to look at in today’s episode. Hi, I’m Ryan from OnProperty, helping you on your journey to financial freedom. And I set the goal of saving a house deposit next year, but I don’t even know if that’s actually possible. And if you’re in that same position where you want to save a house deposit, see how quickly you can do it, save it can be done in a year, then follow me as we work that out. And I show you how to do it yourself as well. So it’s really quite simple to do you need to work out how much do I need to save, break it down into you pay cycle monthly, fortnightly weekly, how much I need to save every month or week, etc? Then ask yourself, Is that even possible? And if it is possible, great. If it’s not? How much extra Do I need to make? And is that possible? And also at the end, ask yourself and assess the situation say Okay, what else do I want to do with myself next year? And does this align with what I want my year to look like? So let’s go through that now starting with number one, which is work out how much you actually need to save. So I recently did a video with Simon Everingham exactly on this topic, which I will link up to down below. But the basics of it is you want to save around a 10 to 20% deposit for your property, as well as about 6% in closing costs. For me, I’m looking at a $450,000 property times by a 10% deposit, and 6%. So you hear 45 grand for a deposit as a 10%. And then around 26 or 27 grand in terms of the closing costs. So all up, you’re looking at around $72,000 that would actually need to save. So you can see there, there’s my pretty simple calculations. So let’s round that up to 70 grand, that’s how much I would need to save. Now we’re to go ahead and take that $70,000 and then we divide it by our pay cycle. So for me, I kind of work on a monthly schedule. So okay, how much would I actually need to save every single month? Or if you work on a weekly schedule, you divide by 52? How much do I need to save per week super rough estimates because I don’t have my calculator on me, but I need so grand six grand a month, around 13 $150 per week. So that’s how you break it down super easy. Next question to ask is, can I actually do that? Is that actually possible for me? Well, for me right now, my business is paying my way. So it’s paying for my life and everything. My business income is pretty passive in nature, but it’s just paying for my life. It’s not giving me an extra $70,000 per year after tax that I can use to save towards a deposit. So for me, is it possible? The answer is a big fat or big fat Helmer, and my current situation current income? Is this possible for me? Absolutely not. Maybe it was just a single guy living in my van, but I got a whole bunch of kids to take care of. So the answer for me, unfortunately, is no. So the next question is, okay, how much extra would I need to make to be able to save that. So for me, I’ve got to pay tax on top of my money. So probably around 30% tax, which means i’d need to save around what needs to earn an extra $100,000 to say that 70% deposit. So 100,000 minus 30%, or minus 30 grand equals 70,000. So I’d have to increase my income by 100 grand, which is effectively doubling my income is what I would need to do next year to save a deposit. On top of that, I still got about 10 to 14 grand of debt that I need to pay off. So I need to add another 20 grand for that. So increase my income by 120. k next year. Is that possible? Look, it potentially is okay. I could potentially increase my income that much if I was willing to work myself to the bone. And that’s why we have the last question, which is, what else do you want to do with your life this year, I found myself a couple years ago, deep, deep in debt. And I was really struggling to get by I nearly went bankrupt, I finally like pulled myself out of that increase my income and got myself in a good position. I have worked myself to the bone where it’s really hard in order to do that. And so I have to ask myself, okay, doubling my income or increasing it by 100 grand, maybe possible next year. But I would have to work extremely hard, probably even harder than I’ve worked over the last couple of years to do that in just one year. Do I want to do that? And the answer for me and what resonates in my heart is no, I don’t want to do that. I have worked so hard to get to where I am today. I still want to grow my business. I still want to grow my income. But I don’t want to miss out on this best part of life that I’m living right now in order to do that. So For me, the answer is no, I’m still setting this as a goal. Because why not? If I don’t achieve it, I’m not too fast. But it’s okay. For me, it’s probably a two year goal rather than a one year goal. And that to me goal is going to come more from increasing my income, rather than saying saving $3,000 a month, starting next month. So for me, it’s more, okay, at least now I know that that 100 grand figure, that’s how much I need to increase my income per year. And if I can do that, I could effectively easily save a deposit every single year. So for me, the focus shifts from Okay, every month, I gotta say this much to Okay, I need to get to this point where saving just becomes really easy for me. So what do I want to do this year? Does that align with me? And then also, I guess the last question that you can ask yourself is what is my 10 year ago, 15 years ago, 20 years ago, what is my long term goal, because sometimes we set these big goals of our saving deposit in a year, but we don’t have the perspective of where we want to be in the future. And by taking a 10 year timeline instead of just a one year after you can give your one year goals some breathing room to work with. So for me my 10 year goal for properties for granny flats, I would own four properties for granny flats have a thriving business that I absolutely love. But investing wise, that’s where I want to be eight incomes coming in. If I can get to that I’d be in a heavily cashflow, positive position, the properties will be paying themselves off over time. And when I do achieve financial freedom through the properties of a good level of financial freedom. So I think, okay, 10 year timeline, that’s where I want to be, I also want to build my business so I can get to this income. And I can save a deposit every single year. So it kind of gives him breathing room this year, I don’t have to do it. Next year, save a deposit in one year, I can focus on growing my income next year. And then the following year, hopefully saving a deposit in one year will be a lot easier. So if you’re sitting there and you’re thinking, Okay, I want to save a deposit in one year, is it possible, it’s really easy work out how much you need to save. Obviously, you can adjust that you can go lower or higher on your how expensive a property you’re going for, in order to adjust that. So rather than 450,000. If I go for 350, I would only have to save around 50 to $55,000. But you know, I want to push it a bit. If you’re going up towards a million dollars, obviously i’d need to save a lot more money so you can adjust things there. work out how much you need to save, break it down as a monthly fortnightly weekly, whatever your pay cycle is ask yourself if that’s possible. And if it’s not possible, don’t say Oh, it’s just not possible, say how much extra Do I need to earn to achieve that? And what can I do to earn that extra income? And it’s really that last question, what can I do to earn that extra income? That is going to completely shift and change your life? just continually ask yourself what can I do? What can I do? What can I do and you will be amazed with the ideas that you come up with. So I wish you the absolute best going out there and saving your property deposit. Make sure you subscribe to the channel for more property updates coming and great interviews with a whole bunch of investors and people in the industry. Thanks so much for tuning in. Until next time, stay positive