Time to talk money. Grab a coffee and have a read...
I know many others around my age (I'm 25 in March) wanting to get on the property ladder, and I get a lot of q's around the whole house buying process and more specifically, saving for a deposit.
I thought I'd write a bit about mine and Neil's story saving for our place and the cuts we had to make (and still have to) to acquire a big enough deposit to buy in the Brighton/Hove area whilst keeping maintenance costs of the property in mind.
A bit of background first...
We bought our 1 bedroom flat for £223,000 in 2014.
We paid more for a 1 bedroom flat than my twin brother paid for a 4 bedroom beautiful house in Belfast.
I absolutely adore my flat but I'm not going to lie, I've had thoughts like, "if I had my time again, I'd have moved to a cheaper city" or "I'd have continued living at home and gone into property developing" i.e buying a house up north for around £90,000 and doing it up to sell on for a profit.
So the first thing I tell my friends when they ask about house saving is, think about every option available to you before you buy. Particularly if you're living somewhere expensive like London, Brighton, Oxford, Edinburgh etc. You want to get the most value for money and whilst there's many perks of buying in expensive cities like house prices and demand constantly increasing, you don't want to have any regrets.
Before Neil & I bought our flat in Hove, we poured our heart and soul into savings. It meant a radical lifestyle change for us.
On to how I saved...
When I first began saving seriously, I lived at home with my mum. I paid rent but was lucky enough to be able to save 75% of my monthly earnings, living off £50 a week for socialising after bills etc.
If you're living at home it is totally possible to save at least a third of your full time earnings every month. It's surprising how little money we need to live and still be happy.
And if you're renting, try saving 20% of your income.
Now that I own a place and have a pretty hefty mortgage I still save 20% of my salary, if not more, and live on about £30-50 a week (after my mortgage, bills + food costs are taken out).
Over the past 4 years I've learned that £30-50 a week is more than enough to live on. In fact, it's actually pretty comfortable. So essentially all you need is between £90-150 a month to live life and save the rest (particularly promising if you're living at home paying no rent).
So, my 10 commandments to live by when saving for a house
1. Quit buying new clothes
Bar the exception of an occasion like a wedding or a birthday.
I know people who could spend their whole pay checks at Topshop & Zara. I used to do the same, but quickly realised having too many clothes cluttered my lifestyle and wasn't making me as happy as seeing money mount up in my savings for my one goal. Plus, it encouraged me to not own as much so when I eventually came to move, it was a breeze.
I found that digging out old stuff and re-wearing things became fun. You probably have a lot more beautiful clothes than you think and simply don't need to buy more things, so this is a big monthly saving even when all other 9 commandments are broken.
See that dress I'm prancing around in in the photo above? Bought it about 3 years before this photo was taken and never wore it. Good as new!
2. Very rarely shop for cosmetics
This means make up, skincare, nail polish, hair dye, hair cuts, waxes, spray tans etc, in my opinion, all of this is unnecessary cost. I own one face wash, some moisturiser, sun cream, basic make up essentials like foundation, mascara, one eyeshadow palette and a lipstick and rotate these when things need replacing every 6 months or so. And that's actually more than I need.
The best thing I ever did was ban myself from going to Boots and Superdrug on lunch breaks. I would easily spend £20 here and there on products that I ended up being overwhelmed with when I didn't get use out of them.
If you buy your basics in Tesco during your weekly shop you won't be tempted with Barry M nail polishes in every shade and other bits and bobs that add up. And if you only use luxury skin care, that's totally ok too. If you buy cheap you buy twice I always think, and expensive skincare is an investment, I just try to make sure that when I buy a product I finish it before I buy another.
3. Don't use public transport
I'm lucky to live a 40min walk from my office and my commute is the highlight of my working day - I walk to and from work.
Setting your own pace and not being dependent on stressed out bus drivers in traffic is so refreshing.
It's a healthier and environmentally friendly option and it might even make you that bit happier getting a bit of exercise and time to yourself in - I love it.
If you live a little too far to walk, how about cycling? or try make a saving by buying annual tickets. It's definitely worth breaking down your finances to see how much you're spending on transport and how much you can save.
4. Opt for fun free stuff, instead of dining out and splashing cash
Some people think tightening your finances puts pressure on your social life. To some extent yes, if your friends invite you for a fancy meal or a weekend away somewhere and you always have to say no. Sometimes friends can't accept that you're in savings mode and can make you feel a tad guilty. But don't be disheartened if this happens. If friends aren't willing to support your financial choices and make you feel guilty for always cancelling, sack them off.
Picnics, walks, bike rides, museum visits, a cuppa tea around your house, are a lot more fun and intimate than getting hammered in a club where you can't hear one another and spend your weeks allowance on one round.
If you're single and seeing people or if a big part of your relationship is going to the cinema and eating in restaurants, you should try and make home cooking more of a joy. You'll learn about each other, you'll see whether he's husband potential if he can cook you a tasty slap up meal, and you'll eat out less and save a fortune. You can always make going out more of a monthly treat and you'll not only save but have something to look forward to. Neil and I do this :)
5. Quit giving your hard earned money to places like Starbucks, McDonalds, KFC, Costa etc
... and start bringing your own drinks or snacks everywhere you go. I carry a Keep Cup of tea or coffee with me to stop me paying for a caffeine hit. It cost me about £10 to buy a good transportable mug that doesn't leak or burn my hands when I'm on the run, and it's saved me so much time and money on Starbucks trips. I also limit myself to McDonalds only on those very rare hangover days!
6. Plan your meals meticulously
I always think that using your time wisely is the single most effective way you can make a big impact on your savings.
What I mean by this is, instead of doing several trips to a supermarket in one week spending £20 a pop, plan out meals in advance so that you only buy exactly what you need for the full week. This way you won't end up buying a whole bag of peppers for your fajitas and not have any use for the rest later in the week. It not only reduces waste, it allows you to get creative with how you're using leftover food (stuffed peppers anyone?) thus saving money.
7. Save into an ISA
I won't pretend I'm an expert in banking because we all know I'm faaar from it. But from what I know, ISAs can help accelerate your saving once you're well on your way there. You benefit from tax relief on proportions of your money. I thought I'd include this in here as saving in your current account or general savings might mean you're missing out. Research it well.
It's also a good idea to save into an account that gives you limited access when your willpower takes a dip during the Topshop sale.
8. Be creative when it comes to earning money on top of your salary
...and save every penny of it.
I like to call this approach, side hustling. Popularised in America more recently.
How do you side hustle? Think about one (or several) skills you could potentially offer people and charge for your services. If you're a great photographer, try shooting pets, babies, or events. If you're a blogger and a whizz at content creation and social media, try approaching companies to guest post or manage their accounts for a fee. You can even set up car boot sales or sell on ebay to make a couple of extra pound here and there.
9. Ditch Christmas and birthdays, and make something lovingly handmade for free
This is particularly tough to do, especially when all you want to do at Christmas is shower your loved ones in gifts and chocolate to show you love them. But there are ways you can show you care with unique gestures and experiences at the fraction of the cost, or no cost at all.
Luckily, when I was saving for my own flat, everyone and the world heard about it. All the times I said "no sorry, I can't do xxx because I'm saving" meant people never expected a lot at Christmas and birthdays. I made handmade cards, and gave gifts like "A hot chocolate + a film night at my new place once we're moved in" and people loved this more than buying them a state of the art drone or iPhone.
10. Finally, possibly the most important commandment of all... begin a savings spreadsheet
Budget and record EVERYTHING going in and out of all of your accounts including your savings. Work out what your very lean disposable income is (i.e what's the smallest amount of money you need to stay alive and be content once all your bills are paid, then save the rest).
Once you're forecasting how much you can potentially save in one year or two, that's when savings start to become a bit more fun. Set yourself monthly goals and try to exceed them.
I hope you got value from this post. If you did, please share.