How To Save Money For A House On A Low Income
Australian home prices can make property ownership seem like a pipe dream for those on low incomes. The truth is that it’s possible to save money for a house on a low income.
It’s not easy but it’s definitely doable. My recent interview with Matt Chamberlain is proof of this. He was able to purchase this first investment property on an income of around $50,000.
Use the following tips to help you save money for a house, even if your income is on the lower end of the scale. You may find that a property purchase is within closer reach than you imagined.
1. Assess Income And Expenses
If you’re serious about saving money on a low income, the first thing you should do is note your income and expenses.
It’s impossible to manage your money if you don’t know how much is coming in and going out.
Make a list of your monthly income, which may include weekly or fortnightly wages or salary, government benefits, income from investments or a pension.
Next, track your spending over a month. Be sure to include all your spending, even if it’s a few cents here and there.
This will give you insight into where your money is going, and it can help to separate what you need from what you want.
2. Draw Up A Budget
When you’ve worked out your monthly income and expenses, draw up a budget that includes your regular monthly expenses, entertainment and savings.
It’s important to include savings in your budget, rather than saving only what’s left over at the end of the month.
Use apps such as Truebill to track your personal finances, plan your budget, and remind you about your bills.
3. Watch Your Food Spending
In 2018, ABC reported the ABARES analysed data from the Australian Bureau of Statistics and found that the average person spent approximately $1,600 per year on eating out in 2015 and 2016.
Whether you go to restaurants, get takeout or order via Uber Eats, consider cutting down the amount of money you spend on food from restaurants. Yes, it can be convenient, but so is meal planning and cooking large quantities that you can freeze.
4. Reduce Your Housing Costs
If you spend a significant portion of your income on rent, find ways to reduce your housing costs. Three ways you can do this include:
Moving to a new location—As fantastic as your neighbourhood may be, you may find cheaper rent elsewhere. Do your research and choose a suburb that is still convenient, yet on the lower end of the rental scale. It might not be the ideal location, but it’s also not a permanent situation for you.
Move to a smaller place—Whether you’re renting a house, townhouse, or apartment, consider moving to a smaller place for a lower rental.
Move into a share house—You could pay significantly less rent for a room in a share house than you would for an apartment or house to yourself.
5. Tackle Your Debt
If you’re in debt, whether it’s a massive credit card bill, a store account or a bank loan, make a point of paying it off.
Interest on most debt is exorbitant, and the faster you settle with creditors, the better.
You may need to save slightly less than you would like initially, but once your debt is settled, you can redirect what you would’ve spent into your home savings account.
6. Set Up An Automatic Transfer
Make saving money when you get your pay cheque easier by automating the process. Set up an automatic debit to transfer a set amount of money to your savings account whenever you get paid.
This is much easier than deciding to save every month, especially in months when you have higher expenses than usual—remember, life is what happens after we make plans.
7. Purchase Second-Hand Goods
There is no shortage of second-hand, charity and pawn shops in Australia, so buying second-hand goods is a viable option.
Whether you’re looking for pots and kitchen appliances, furniture, tools, clothing, or exercise equipment, there’s a good chance you can find it in good condition at one of these stores.
Goods will also be a fraction of the price you would’ve paid if you had bought them new.
8. Shop Around for The Best Deals
All too often we sign up for a service we need, then stick with it year after year. In time, you may well be paying over the odds for insurance premiums, mobile phone plans and health insurance.
Do some research and see if there are more affordable car insurance options, better mobile plans or cheaper health insurance. The time you spend researching could save you a significant sum of money in the long run.
9. Boost Your Income
There are various ways that you can increase the amount of money you earn every month. One way would be to ask your boss to consider giving you a raise. If your work is up to scratch and you’ve proven yourself to be an asset to the business, there’s a good chance management will consider your request.
Another way to increase your income is to find a side-hustle. Whether you do a bit of freelancing in the evenings or on weekends, bake and sell cupcakes, or walk dogs in the neighbourhood, making extra money that you can save is not impossible.
Take Care Of The Pennies
Although none of the above tips are likely to save you thousands of dollars every month, together they can make a significant difference to your financial situation and help you save for a house. It’s a case of taking care of the pennies (cents) and letting the pounds (dollars) take care of themselves.