Get serious about saving for a deposit

If you’ve already taken the big decision to stop renting and buy a home of your own this year, the next thing you’ll need to work on is saving a deposit.
This is of course not easy, says Harcourts Africa CEO Richard Gray, but there are several ways to speed things up – starting with a detailed, written household budget.
“You first need to make sure that you are in a positive cash flow position, with more money coming in than going out, and it really helps to write down absolutely everything you spend for a month or two. You will then be able to see exactly where you are spending more than you should – or if you are shortchanging yourself with regard to necessary items like food and transport.
Next, he says, you should focus on getting rid of debt such as credit card or store card balances. “The high interest rates on such debts mean that you should pay them off first before you start to save for a deposit. Also, you should absolutely not buy anything new on a budget plan or hire purchase until you have finished saving for your home.
“And those savings should go into a separate, dedicated account. Once you have paid off your card debts, find out from your bank or financial adviser what type of account will offer the best interest rate and attract the lowest banking fees on your savings, and get going on your deposit plan.”
To start with, you should be able to divert the amount you were paying off debt each month into your new savings account. But, Gray says, now is also the time to “ruthlessly re-examine” every item on your budget to see where you can free up more cash to save, and also to consider whether you have any assets that can be sold to swell your deposit account.
“You may have a motorcycle or a caravan sitting in your garage than you can sell, for example, or decide that you can manage with one car instead of two by making more use of public transport. And while it may not be much fun to cut down on expenses, you will find the motivation if buying your own home is a strong enough goal.”
Some ideas for saving money include the following:
* Try to cut down on rent. Move to cheaper accommodation for a while or if you can, move in with family and share costs. This should also cut your expenditure on water and electricity.
* Don’t spend money on eating out or takeaways, and watch your grocery bills. Take your own lunch to work and draw up some set menus for meals at home so you can shop only for the ingredients you will need per week or month.
*Give up smoking and/ or drinking alcohol and pay what you would have spent on these items into your savings account at the start of each month. You’ll have the added benefit of better health. 
* Forget about fashion. You don’t have to look like a frump, but find ways to make do with the clothes and shoes you have until you have reached your savings goal. Check your expenditure on makeup and cosmetics as well.     
* Watch movies or sport at home with friends instead of going out to the cinema, pub or stadium.
*Check your mobile phone account. If you are on contract you could consider switching to a pre-paid plan so you can accurately budget how much you will spend every month.
* Check your banking fees. Charges for processing cheques, paying bills and making deposits and withdrawals all add up, so make sure your current account is the one with the lowest fees. Make use of the internet and cellphone banking to make payments and draw cash at the till when you do your shopping instead of at an ATM.
If you have the time, Gray says, you should also consider trying to earn more money to put into your savings account. “You could perhaps take on a part-time job in the evenings or on weekends, or make things to sell at a market. Even if the earnings are modest, they will still help to speed up progress towards your goal.”

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