How to save a deposit in five years
Author: Carol Jennings
Start saving today if you want to meet tomorrow’s financial goals.
A couple of the younger girls in my office have been talking about money recently, namely how little they have, and I realised not everyone understands how to save.
I think we ladies can sometimes have an unconscious presumption that our knight in shining armour will come and take care of us – but there is a whole new Fairy Tale out there and in this one, Cinderella starts a cleaning business and buys the castle off the Prince when he goes into foreclosure.
No – its not really gender related, but if you are younger than 30 and don’t have decent savings or a property, its time to start to get conscious and think ahead.
So let’s give it a year, just for starters. Whether you want to buy a house and need money for a deposit, or are thinking long term for your retirement, for your future well-being, you have to start today. TODAY. All you need is some awareness, a chunk of decent commitment and a little patience. Put on your big girl pants and start acting like an adult.
Work out the numbers
Work out a number you are aiming for, then break it down to weeks or even days. If you could find about $27 a day you would have a $50,000 down payment in less than 5 years. That’s excluding any interest you might earn. Why don’t you just commit for this year? Just be thrifty and squirrel it away, just for the year.
I get it. $200 is a lot to save in a week, but if you are currently buying a coffee a day, drinking a bottle of bought water, and eating out every lunchtime, that’s almost $100 a week you should be saving. Make a coffee in the office. Or drink free tap water. Plan your meals in advance to incorporate tomorrows lunch. Next, share a car ride and split the petrol, don’t buy that pair of shoes, or skip that last glass of wine at the pub. There’s your $200.
Where do you live now?
If you are renting, round up your rent (from $180 to $210 for instance) and put that extra $30 into savings. If you think of it as rent, its easier to save it. Out of sight, out of mind. Could you sublet or rent out one of the rooms for a while and put that money into savings? Or, can you just go home and live for a year, and explain to your family you are saving for your own house.
If you are already living with your parents and not contributing you should work out what reasonable rents are in your area and put at least that away every week. You aren’t paying for electricity either. No excuses. (And by the way, you should help out more around the house to pay off your parents! The reason they are helping you is so you can get ahead, not drink more lattes.)
And speaking of lattes…
A little adds up to a lot
Budget baby. Write a budget. Where are you frittering away all your money? Give up spontaneity – plan your week, your lunches, your outings, your allowable coffees. Don’t set ridiculous targets and deprive yourself of everything fun or you won’t accomplish your goal. Just consider if that pair of shoes, expensive mascara, cappuccino is worth NOT owning a house in five years. Lots of available apps to follow a budget or just make a spreadsheet, but know where your money goes. Every penny. It’s a bit like losing weight but in reverse – more in, less out.
Get yourself to ALDI or Kmart for cosmetics and workout clothes. You don’t need Lorna Jane and MAC to look good. (And frankly, you have enough workout clothes already). Give up the designer mascara for Maybelline, just for a year. It becomes a bit of a game, and once you start playing you will find it quite addictive. Don’t go to the mall for recreation either. Just stay away from shops.
Lengthen the time between your treats: tans, or manicure, massages or highlights. If you stretch out your hair appointment from 12 weeks to 15 weeks for instance you would save the cost of one appointment per year. Put it in your bank, not theirs.
I’ll help you, you help me
This year: cancel the gym membership. Instead find two friends and motivate each other to do mini workouts together, take walks or go for a run, HELP each other stay fit and strong and kick goals. Take turns to be the trainer and make it fun, while being accountable. Think about it. There would not be so many gyms if they were not making a LOT of money from underused paid memberships. Walking is free.
Swap clothes with a like-sized friend who works elsewhere. No one pays as much attention to what you are wearing as you do. Do you have a friend you can borrow from for that specific work event or cousins wedding? Don’t buy a dress to wear once then store in your closet.
You can even buy in bulk and split between the three of you – loo rolls, basmati rice, shampoo. Buy the cheaper giant version and split the cost.
You don’t need all that
Depending on where you work, you only need a couple of good basic skirts in a neutral colour – maybe one in black, one in cream or taupe and one in navy blue. Then five tops and two cardigans or jackets. If you rotate that you have a full month of clothes. Check out the men? Did you notice that he is wearing the same pants three days in a row? No? I thought not. If you own reasonably priced decent quality (think Target) it should last you years. Go classic, not trendy.
Never, ever, ever, ever buy full price. Sales events are practically monthly. Just wait, and if you really absolutely must spend money, at least buy it at a discount.
Sell it. If you have clothes you are not wearing, get yourself on EBay and make a few bucks. Add $50 to your savings account every now and then. Any unused, unloved ornaments? DVDs? Sell them.
Hard, cold CASH
Save all gold coins in a jar or tin – for instance an empty coke bottle can fit $880 in $2 coins.
Use cash and not your credit card. Its easy to pay’n’wave and ignore the consequences, but if you have to physically peel off notes it makes you more aware. No online shopping. I don’t care if the shipping is free. You don’t need it. Not this year anyway.
If you have a current credit card debt or car loan, take a look to see if there is any way of transferring the balance to a lower interest card. Take a look at all the interest you paid to the bank last year. If that doesn’t motivate you to pay cash for everything I don’t know what will.
Where else can you find some cash?
Find a babysitting gig. Money for jam. Dog walking? Even Uber. Could you do some cleaning or take on one shift at a café? Yes, I KNOW that’s hard and not what you want to do your whole life, but we are trying to set UP your whole life with a short amount of hard work. You wouldn’t be the first person in the world to hold down a second job for a while. Suck it up Princess. Only two ways to save more money: earn more and spend less.
Finally, remember you alone are responsible for this. If you cheat and buy that swimsuit / new iphone / expensive foundation no one cares but you. You are only cheating yourself. But the sense of accomplishment you will get when you check out the balance in your savings account after six months and see that YOU have made a difference will have you walking on air. Start today.
In five years’ time, give me a call and we will start looking for your property.
This article provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such as it does not take into account your personal circumstances or needs. Professional advice should be sought prior to any action being taken in reliance on any of the information.