Owning your home is a dream for many, but it might never become a reality for some. The way things are going, a lot of young people in the UK won’t be able to afford a home until they hit their late 30s or even 40s. Saving for a deposit is extremely difficult, especially if you live in London or elsewhere with a high living cost. And once you do have a sum of cash to get you started, you can struggle to find a home that’s anywhere close to affordable. The main reason it’s so hard to save up a deposit amount is the cost of renting. Some people spend 50% or more of their income on their rent. So how can you rent and save at the same time?
Rent a Cheaper Home
One of the most obvious ways of saving more when you rent is spending less on your rent each month. Of course, this option is by no means available to everyone. Finding somewhere to rent can be very difficult when there are lots of factors your home needs to match up with. But there are several ways you can cut down on your rental costs if you’re able to find somewhere to live. The first option is to remain independent and contact a letting agent to find other suitable properties near you. You could downsize, move slightly further out of town (though not so far you spend more on transport) or move into a shared home. Another way to save is to move back in with your parents. It might not be the most desirable method, but it could help you to save a lot.
Create a Budget with Set Savings
Whether you move or stay put, you need a budget to make sure you stay on track. First, you need to work out what you spend on everything each month. Then it’s time to find ways to cut back. You could use less energy and water, stop having some treats or go out less. To make sure you’re saving enough, find out how much you can set aside and put it into your savings account as soon as you get paid.
Have an Emergency Fund
Unexpected costs can come up all the time, whether you rent or own your home. If you have car troubles or lose your phone, you don’t want to dip into your savings to pay for it. Build up a separate emergency fund for those occasions when you need cash fast. By doing this, you know just how much you have saved up, and you know the amount won’t decrease because something comes up that you haven’t budgeted for.
Pick the Best Savings Account
When you start saving, you want to make sure that your money is working as hard as possible. Don’t just go with the savings account your current bank offers. It’s a good idea to shop around and find one with the best interest rate to help you reach your goal a little faster. If you want to resist the temptation of withdrawing money, avoid instant access accounts.
Saving for a deposit while you rent isn’t easy, but you can do it if you put the effort it. Set yourself a clear goal and a plan of action, and you’ll soon be looking for your first home.