Financial freedom requires a considerable degree of self-discipline and control on your part. That does not necessarily mean that people who do not save a lot of money lack self-control. Saving money is incredibly difficult not just because of the pressures of daily living expenses but due to the fact that it requires a careful attention to your finances accompanied with self-discipline.
If you are grappling with pressing current expenses, future plans and priorities such as college or real estate investment will quickly stop being priorities. They will simply be unachievable goals. It is called the psychology of scarcity. Once you are in the grip of it, you are practically helpless when it comes to prudent financial management. You will be living for the moment and surrendering your affairs to “fate”. And fate may not be so forgiving.
The Hard Climb for First Time Homebuyers
Saving money is especially difficult for the first time homebuyers. Many contend that it took them anywhere from five to ten years to save enough deposit for their first property purchase. Due to various financial constraints or simply the difficulty in saving, many will struggle to get on the property ladder and have to contend with renting for years.
The Burden on Young People
Getting a toehold on the property ladder can be difficult for young people due to a combination of factors such as low salaries, high student debts repayments as well as the high cost of rental markets in the urban areas. If a significant amount of your little income goes into rental costs and debts, you are obviously going to take years to save a substantial amount.
As a result, many young people are likely to rely on “mum and dad bank”, borrowing from their parents to fund their first home ownership. In some cases, that is not even an option because the parents may not have substantial savings.
Lack of Financially Savvy
Lack of prudence in the management of financial affairs is another bottleneck that many first time homebuyers are likely to face. Many are throwing a lot of good money down the drain in ways they don’t even realise. For example, you don’t have to live in a high cost apartment, especially if you are still single. Rent savings can easily bump up your savings for your first property deposit.
There are numerous prudent financial decisions that you can take at an early age in order to ramp up your savings. For example, you could cut down on your rental costs by moving to cheaper apartments.
Start budgeting your money in order to reduce your living costs and slot away some cash for a future house deposit.
Leverage Pension Schemes
For longer term financial planning and stability, it is advisable to begin saving money in pension schemes. This is particular advantageous because a lot of companies will generally match your pension contributions thus helping you build a good retirement nest egg relatively quickly.
How to Save Money for a House Deposit
A sure way to save money for a house deposit is by doing it through your cash savings. This option ensures that you have the money when you need it and your savings will be relatively safe in absolute terms. The interest earned on cash savings is also tax free making it a good starting point for many aspiring homeowners.
Aspiring homebuyers must also enforce a more disciplined budgeting regimen that gives them more control and insight into how they spend their money and helps them direct their focus in the right areas.