Save for Your First Home: Your Financial Fitness Plan

You will probably find numerous body coaches out there to help you stay in shape, but have you given any thought to beefing up your savings?

Why does it matter?

Well, this may be your only shot to get on the housing ladder. Read on to find out why.

“Dog-eat-dog” might be a cliché, but it surely rings true as an explanation for UK’s housing market today.

How else can you describe the 40% of private renters, who characterised the letting market to be “unethical and ruthless” in the latest survey?

Or the truth that a friend who was viewing a property in London a few weeks ago, was one of the dozens flocking in and out, all day long, with some frantic purchasers increasing the selling price then and there at the doorstep?

It is inevitable that you feel disheartened whilst saving money for a house, which seems to be becoming more and more difficult.

Yet, many people have somehow managed to purchase their very first property, over the course of the previous year.

So, the first-time buyer isn’t extinct like dodos, but like pandas, they’re endangered, and not yet out of the woods.

On average, the expense of getting onto the housing ladder is based on where you stay, how much deposit you have actually saved, whether you have a sound credit score, and how simple it is to access a competitive high loan to value (LTV) mortgage.

So, it would be a lot easier to crack the egg if you are living outside M25, you have got a better pay packet, you are receiving assistance with the deposit from your mum and dad, and if you happen to be purchasing at the time when mortgage providers are not feeling particularly squeamish about lending to first-time buyers.

It is not at all easy, fast or straightforward, but we’d like to draw a similarity between saving for the first house and embarking on a new fitness regime. You have a goal (maybe defined abs), you know it’ll take some time (maybe months or years), and you’ll also have to make certain sacrifices that’ll be worth it.

So, we have developed a Financial Fitness Plan, but rather than toning up your abs, we’ll tone up your savings and expenditure. Also, we assure you that if you follow this plan, you’ll be well on your way to having a sweet savings fund.

Let’s get started!

  • Budgeting

First of all, rule over your earnings and current spending. Are you spending thousands of pounds like a celebrity? If that is the case, we might have already solved the case of “why there isn’t much left for your house”. If you have not prepared a budget before, now is the time to do so.

If you’ve created an online account it becomes easier for you keep a track of all your savings and expenditure. But you need to bear in mind that you may, on certain occasions, use money.

Indeed, it would be amazing if you were consciously limiting yourself on your expenses. With a proper budget, you can easily take a look at your earning versus your expenditure over the past few months.

  • Go Digital

You do not have to be old school like making use of pen and paper to note down all your expenses in a diary. You can simply seek help from a “spending diaries” app and other free online platforms.

These platforms are “read-only” applications that come with colourful graphics, which let you view all your savings, card, and current accounts, in the same place.

The aim is very simple. You just need to target a few flabby expenditures, trim it down and get completely fit for savings. You will be astounded at how all your trips to the pub can tot up over time. Simply cutting down on those trips can take you a long way.

  • Better Deals

Always rank your expenditure in the order of necessity. Think of Maslow’s hierarchy of needs and maybe change it a bit.

You cannot really muddle through without a shelter, so ensure you’re putting your rent at the top of the hierarchy, then your utilities (you of course need water and WiFi, right?) followed by the council tax.

Then add your food expenses, and at the bottom of the pile, should be your discretionary expenditure, such as clothes, eating out, online temptations, and impulse purchases.

In between, there may be a direct debit or two, which could be killed, or possibly even one, which you don’t really remember signing up for. You may even want to review your energy bills, so as to find out whether switching could save some money (it certainly will).

All that you need is a note of your present expenditure. So, how about the broadband deal or mobile contract?

The time spent working out on what exactly you’re getting, what you really need, and how much you must be actually paying for it, would nearly pay a dividend in lower bills.

Experts reckon that millennials who switch home, energy, and car insurance per year, tend to gain in excess of £500. Doesn’t that sound good?

  • Little Luxuries

Don’t try to make dramatic cutbacks all at once. It is like trying to bench 80kg at the gym, on your first day. Allow yourself little luxuries. Enjoy the newest seasonal Starbucks coffee!

Some experts suggest that, reluctant savers often go for expensive plans. They reckon that if £2.50 is spent on a regular caffeine fix, then it can be instead diverted to shares and stocks, which would eventually give you £50 per month, i.e., £600 per year.

This would not only nab you a bonus of £150, but your total returns after around 10 years could perhaps top £7,000, provided that your investment grows at 5% per year.

You can even make your own lunch every day, and take benefit from coupons in order to save on food expenses. You could maybe take a look at your online accounts once a week or fortnight, and then make a note of any of your extremely frivolous/high/needless expenditure.

For example, you can tell yourself that you’ll let yourself off the hook for a £30 cleanser, as it really works wonders, but you have to make it an exception, not the rule.

You can look for options that are easy on your pocket, and whenever you receive a decent pay cheque from any of your earnings, you could try putting as much money as possible in your savings account.

  • Cash Control

If you’re struggling with overspending, particularly at shops or night outs with friends, then you can withdraw some amount of money from the ATM beforehand, leave the card, and stick by the allocated amount.

If you are prone to the occasional online splurge, then you could simply install apps or some other piece of software, which could block your access to some of the sites. If you do so, your future self would certainly thank you!

If you’ve taken out any credit card debt or loan, pay that off right before you start saving.

Now balance-transfer credit cards give you 3 years or even more to do that, with transfer charges being even more competitive.

Also, if you have taken out a loan or credit card, do check for Payment Protection Insurance (PPI). If the insurance has been attached to your loan without you knowing it, then you can claim back PPI to get your money.

  • The Savings Habit

Your financial fitness makeover must not be a flash plan. You are in this for the long haul. So, to make sure your saving habit really sticks, set up a daily standing instruction from your current account, to a dedicated savings account, so that you are not noticing the cash going out.

You can time it for the day after you’re paid (isn’t that a great idea?) and it’ll soon become quite natural for you.

If you’re concerned about having enough in reserve for unforeseen bills or vacations, then keep a separate account for emergency funds.

Soon enough, your savings accounts can turn out to be your house buying funding pot. Now, the question that arises is where to put the money–in investments or savings?

If you’re serious about becoming a homeowner, then a Lifetime ISA would get you there quickly, but a few major caveats have to be remembered. So, go forth and become financially fit!


About the author: kevin

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