How do I start saving for a mortgage deposit?

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Buying a house is expensive. One of the most daunting steps in the home-buying process is putting down a deposit. It represents a large financial hurdle, especially for first-time buyers. Unlike second and subsequent homebuyers, first-time buyers have no equity in a home that they can use to help pay the deposit. Therefore, it can be challenging to save the funds necessary to afford the deposit.

Outlined below are some tips and strategies that you can use to start saving for a housing deposit.

1. Start Saving Early 

A housing deposit can cost a considerable amount of money, so it is important to start saving as soon as possible. Saving a little each month for years will add up in the end, while also limiting any financial stress that significant saving and budgeting can cause.  

2. Track Your Expenses and Spending

Keep all your receipts and bills for one month and review them. Seeing where your money is going and how much of it each month will offer you a much better understanding of your spending and overall personal finance. You can download an online banking app and input your spending data to help you keep track of your expenses.

3. Take Control of Your Spending Habits

Once you understand where your money is going, it is important to use that information and take control of your spending so that you can save money. Review your bills. If there is a credit card that you aren’t using, cancel it. Cancel any extra plans or subscriptions on your phone that you aren’t using. Meal prep at home and limit your dining out. Only buy the groceries that you need for those meals. Lastly, be aware of how much you are spending on coffee!

4. Open a Separate Deposit Savings Account

Creating a separate savings account for your deposit will help you avoid taking out money and using those funds for other expenses. Without a separate account, it can be hard to truly know how much you have saved. Additionally, you may be easily urged to use those funds to pay bills, taxes, etc.

5. Set Financial Goals and Work Towards Them

Write down financial goals that you have. Whether it is to reduce your spending overall or cut back on dining out, setting goals for yourself is the first step in improving your personal finance. To achieve those goals, be aware of your spending habits. It is ok to splurge on the rare night out but going out every week will make it difficult for you to see real results.