$0 to First Home Deposit.

Saving a house deposit seems to be the biggest roadblock to buying your first property. It’s easy for most people to feel like they have to give up their avocado toast and almond latte ritual to help save for a deposit, causing them to give up before they even start trying. Well if this is a luxury you still want to enjoy, I’m here to tell you that you can, and help walk you through the steps to enable you to enjoy the little things, whilst still saving for a house deposit. For this video I’ll be using Australian averages as an example for buying a house worth $500,000, according to the ABS In 2017–18, the average disposable household income was $1,062 per week. In 2020, The Morrison Government’s First Home Loan Deposit Scheme will help buyers purchase a house with a deposit as low as 5%, saving around $10,000 in Lenders Mortgage Insurance. If you want to know more about the new Morrison Governments first homeowner scheme, you can watch my previous video on BUY Australian property NOW 2020, I’ll leave a link in the description below. So, we are buying a $500,000 house in 2020 with the Morrison Governments first homeowners scheme, at 5% we are going to need a deposit of $25,000. Now the biggest problem you're having with saving a deposit is yourself, and mostly your spending habits. To address this your first step is going to be hiding money from yourself. Step 1 I want you to find the highest interest savings account you can on the market with a new bank you currently don’t bank with, if you’re unsure and not currently with ING current, my opinion would be them as they have a Saving Maximiser account around 2.3%. this is not financial advice. Now I want you to sit down with your closest family member, sign up for the new savings account online, and when it comes time to enter a password get your family member to enter a password you wouldn’t know. This prevents you from logging in and freely transferring money out, but you can still get access if it’s an emergency by asking for the password, If you do need the password for some reasons, make sure they reset it so login in doesn’t become a habit. The game plan here is to deposit money into the account as soon as you get paid, stopping you from seeing it, pretending it doesn’t exist and preventing you from spending it all together. Step 2 is entirely up to you and your current budget, which if you haven’t done recently, I would highly recommend sitting down, look at your recent spending habits and finding areas you are overspending in. If the thought of doing this gives you goosebumps, there are tons of budgeting tools online to help you with this process, this may be the very thing holding you back from saving a house deposit and you need to face your fears and track your Uber eats spending habits. Your new budget should be broken up into 4 buckets, for a general rule of thumb lets break these buckets up into percentages and start with savings at 25%. Bucket 1: Savings 25% Bucket 2: Bills 45% Bucket 3: Food 15% Bucket 4: Spending (Fashion, entertainment, going out) 15% These percentages are just a guide only and will need to be altered to your situation. Step 3: Tell your current bank (not the one you just set up) that you want to set up 3 new separate accounts with $0 monthly costs, otherwise you’re going to another bank who can do this for you. If they are not willing, find a bank who is - $0 monthly running costs is the main goal here. Once you have set up these 3 separate accounts rename them into our 3 new buckets, one for Bills, two for Food and three for spending. Now every week when you get paid, transfer your percentages straight into their respective buckets, so if $1,062 comes in and you’ve allocated 15% to spend, transfer $159 into the spending account. If your weakness is managing your money on a weekly basis, or you're afraid to log in to your online banking because of seeing bills, I would recommend setting up auto payments for the day after you get paid to go directly into your new savings account, and then into your new buckets, You can even allocate your bills to come directly out of your new bills account. The goal here is to never spend more than you have allocated to your bucket for that topic, so for example week 1, we have $159 in spending, we go and get our smashed avocado and almond latte, costs us $35, we have $124 left in spending. Now let's say at the end of the week, we have only spent $90 of our spending, next week when we divide and transfer our money out we would have $228 in spending, which is all yours, to spend guilt-free, as long as your doing the same for savings. If we are starting from $0 on a $1,062 average weekly income and saving 25%, meaning we should be depositing $265 of our $1,062 directly into our new savings account, we can achieve a $25,000 deposit in 94 weeks or 1 year and 10 months. If this still feels too long, here are some ways to speed up the process: > Buy a cheaper house, $400,000 house would only need $20,000 deposit. > Use some initial savings – of you have $5,000 it’s a good head start > Move back home or somewhere cheaper– (Sacrifice now, benefit tomorrow) Bills down to 20% savings up to 50% > If you’re a couple with two salaries you can both do this. > Ask you current employer what you need to do to increase your salary, hit those goals at work and reap the benefits, this is not asking for a pay rise. > Find other ways to increase your income. -Second Job, online business. The only thing slowing you down would be If you currently have debt on a credit card, or any personal loans higher than 6% you should be paying these off first instead of saving, they are costing you way more than you would be saving in the high-interest account. Lastly, this is only going to work if you hold yourself accountable, no one else is going to do it for you, take control of your finances and don’t let them control you. As always, seek your own professional financial advice for your current situation, these steps are just my opinion and how I saved for my first home deposit.

Jordan De Jong

DISCLAIMER: No Financial, Property Buying, Legal, Taxation or Accounting Advice The Listener, Reader or Viewer acknowledges and agrees that: Any information provided by me is provided as general information and for general information purposes only; I have not taken the Listener, Reader or Viewers personal and financial circumstances into account when providing information; I must not and have not provided legal, financial, property buying, accounting or taxation advice to the Listener, Reader or Viewer; The information provided must be verified by the Listener, Reader or Viewer prior to the Listener, Reader or Viewer acting or relying on the information by an independent professional advisor including a legal, financial, taxation, accounting and property buying; The information may not be suitable or applicable to the Listener, Reader or Viewer's individual circumstances; I do not hold an Australian Financial Services Licence as defined by section 9 of the Corporations Act 2001 (Cth) and we are not authorised to provide financial services to the Listener, Reader or Viewer, and we have not provided financial services to the Listener, Reader or Viewer.