Saving for a deposit for your home loan can be a long and tiring task, and sometimes it seems like you are never going to reach your goal.

But there is a way to reach your target and get into your home sooner than you think, but it does require some sacrifice on your part.

Before we get to those however, you will first want to figure out what you will need to save.

Having a savings goal is paramount to your success.

How to calculate your savings goal

You can arrive at this total by knowing how much you are willing to spend on a home – even if it’s a ballpark figure. Once you know this you can then easily figure out how much you need for your deposit.

It’s also a good idea to save a little more than you need for the actual deposit as there are always extra costs you may not consider like solicitor fees, moving costs, and so on.

For example, if you want to spend around $400,000 on your first home, a 5% deposit (the minimum you would need in most circumstances) is going to be $20,000.

To be safe, you could always aim for an extra few thousand dollars to cover the costs and fees associated with buying a home, for a total savings goal of $23,000.

You would also need to pay for Mortgage Insurance when borrowing 95% of the purchase price of the property. This can be paid upfront or become part of the loan.

Making it more manageable

This may sound daunting, but it can take a few years (or more) to save for a home loan.

With this in mind, $23,000 over three years seems a lot more doable. $23,000 becomes roughly $7,700 each year over three years.

If you are saving already then you are off to a great start as you are already in the saving habit and you may already have a sizable fund.

If you are just starting out, then it’s a good idea to start immediately. Either way, you need to know your savings goal is realistic for you.

To do this, divide your yearly goal by 12 to get the monthly amount you need to save. In our example, this would be $641 per month; or, to break it down even further, $320 per fortnight, or $160 per week.

You now need to ask yourself if this is possible.

Before you answer however, you need to factor in all those sacrifices you are going to make to achieve the goal of owning your own home.

Sacrifices

Making sacrifices, unfortunately, is a part of saving for a home deposit these days. Here are some places you can make sacrifices and save money.

Monthly and quarterly bills

Bills like your mobile phone, electricity, cable, internet, and similar can be cut down to save you money.

You can downsize your mobile contract, save electricity in a number of ways, cut your cable and use a cheaper service or downsize to a basic level – there are many ways in which you can save on bills.

Savings can even be made with bills like private health as you can move to a cheaper provider after doing some homework.

Lifestyle changes

This is probably the most important but most difficult change to make.

Areas you can look at are things like how often you go shopping and how much you buy when you do – are you only buying needs, or too many wants?

Going out is a big one, and something you may have to curb is dining out or going clubbing.

If you like to travel, you may need to ignore that itch and stay put for the next few years. Or perhaps holiday locally instead of overseas.

And if you are renting you may want to look at how much you are paying and see if you can move to a cheaper place or perhaps look at sharing with more people to lower the costs. You could also contemplate moving back in with Mum and Dad.

Even simple and seemingly insignificant changes to your lifestyle can lead to big savings.

Taking your lunch to work each day can save your thousands over a year, while re-thinking your transportation(catching public transport to work instead of driving) can help as well.

Earning more

While cutting back can allow you to save more, you may want to consider finding ways to earn more as well, and use this extra cash to save faster.

Getting a second job is an obvious example of this. But there are other ways you can earn some extra money.

And while some of these savings may seem insignificant individually, they will add up over time.

So, while saving $10 on lunch doesn’t seem like much now, if you do that constantly over three years, then it suddenly becomes $1,500! And that’s just one lunch per week – imagine if you saved that five days a week!

Once you have made some sacrifices, you will be able to see how much more you are saving than you are now. You may find you are able to save a lot more than you used to.

Still not working?

If you have made all the sacrifices you can and still find your target unreachable, then think about saving for a little longer or reducing the price of your dream home.

You could do this by looking for your home in less expensive suburbs or perhaps buying a unit or townhouse instead of a house.

Bonus ways to get extra money for your deposit

Here are some additional ways you can increase your savings so you can move into your home a little sooner.

Presents

Get family and friend to deposit money into your “House Fund” for Christmas and birthdays as opposed to giving you gifts.

Staying at home

Stay with your parents a little longer if possible, or if you are renting, then try and live in a place within your means.

Gift giving

Try forgoing gift giving or make your own gifts. And at Christmas time try Secret Santa instead of buying gifts for everyone.

Tax Refund 

Resist the urge to spend your refund (assuming you receive one) and add it to your home deposit instead.

Conclusion

Saving for a deposit can seem impossible, but if you are patient and make a few simple changes in your life you could be moving into your own home much sooner than you think.