Our spending habits represent behavioural patterns that have often become so engrained that we forget to question them. Saving for anything, especially bigger purchases like a car or your first home, requires daily and conscious discipline.
You need to have a ‘date with self’ and face the facts about your spending head-on. Do not let yourself be distracted. Decide what you want to save for – have an image of your new home in your mind and every time you feel tempted to stray, simply remind yourself of the bigger picture.
You need to have a ‘date with self’ and face the facts about your spending head-on. Do not let yourself be distracted. Decide what you want to save for – have an image of your new home in your mind and every time you feel tempted to stray, simply remind yourself of the bigger picture.
Giving up one habit is easier if you have a replacement in mind, so dream about that flat, loft apartment or house that you’ve seen – and before you know it, you could make it a reality.
Here are some easy everyday ways to save towards your home deposit and change your spending habits in preparation for applying for a home loan.
1. Stop buying lunch
Stop buying bottled water, coffee and other favourite carbonated drinks. A coke can cost you in the region of R9 while a takeaway cappuccino might cost you R15. It’s often the small expenses that we overlook.
Similarly a pie at the local garage shop will cost you in the region of R14 while a sandwich, hamburger or pasta salad will probably be R25 to R30. Then, of course, when you are hungry you may be tempted to add in a packet of chips or chocolate. So let’s say your lunch might cost you between R20 and R40 a day - you stand to save a whopping R600 to R800 per month!
2. Do you need to make that call?
Cell phones are wonderful tools (and toys) but it’s easy for the cost to add up quickly if you’re not conscious each time you use it. Understand your contract so you know when your off-peak free call times are and check your SMS usage. If you’re near the end of the contract shop around or ask your current service provider for a better deal.
If you are not on free minutes, ask yourself if you really need to make that call or send that SMS right now – or, if it’s work related, could you wait till you get to the office or rather have that social chat later in the evening on your landline or during your non-peak time.
3. Take stock of your travel costs
How much do you spend a month on fuel, bus or taxi fares? Tally it all up and write the total down. Is this reasonable or could you save anywhere? If your costs are very high you might consider moving closer to work or if you are able to, work at home a few days a week. Often people travel great distances without thinking about looking at a cheaper rental close to work. If you’re already a homeowner this presents a bit more of a challenge, but you may also think about selling and buying closer to work.
You could also start a lift club if you have colleagues or friends who live near you and travel the same route. Beware of other costs like parking – perhaps you can you park in a free or cheaper parking bay or do your shopping where you get free time.
4. Plan your meals for the week
Not planning your meals may mean you scrounging around in an empty fridge and feeling justified in dashing out for pizza because you are now starving. Apart from being healthier, planning your meals will allow you to shop more carefully every week and help you reduce your monthly food bill. Once you get used to it – remember it takes 21 days to establish a new habit – you will probably start enjoying the process of cooking and preparing food at home. Make it fun and try your hand at different recipes. All the rands and cents you save are going into your savings fund – just remember ‘your new home’!
5.Make a shopping list and stick to it
Supermarkets are often places of great temptation and few of us enter with a shopping list. Mostly we wander down the aisles looking for what we ‘need’ while being distracted by random items which we grab and throw in the basket or trolley. To avoid this behaviour write a shopping list and tick off items as you find them – keep your focus and do not allow yourself to be distracted.
Another trick is to take a basket instead of a trolley. Become aware of the prices of items and compare these. Another brand might be cheaper or on special that day or buying certain items in bulk may save you quite a bit.
6. Budget for eating out
Eating out is one of the biggest culprits in squandering your hard-earned money. Of course, it’s one of life’s great pleasures too, so rather work out a budget each month and limit yourself to a certain amount of spend. Then when you do go out for a meal, you’ll appreciate and enjoy it even more.
7. Grow your own herbs and veggies
You’ll be surprised how easy it is and how quickly plants will start producing food. Even if you’re in a flat you can plant in pots and save yourself a packet. You can grow fresh herbs in your kitchen, plant salad greens and even grow your own chillies. If you have some garden space you can plant a small food garden and in a few months’ time you’ll be reaping the rewards in savings and the satisfaction of being able to eat your own organic veggies.
8. Save energy at home
We are all aware of rising electricity costs and by changing your daily habits you can definitely save on your bills. From turning off your geyser to changing to more energy efficient light bulbs and turning off appliances when you are not using them – read 6 tips for saving energy and money.
Water is also becoming a scarce resource and you can save on your water bill by having a shower instead of a bath and reducing the amount of water used in your toilet. Read about water saving tips for the garden and toilet and if you have a garden area you might consider collecting rainwater.
9. Check your bills and contracts
Often we have contracts that might have served their purpose at the time but should now be reassessed. For example, you may have a 3G card, but you have an internet connection at work and an ADSL line at home, so you hardly ever use it. If the contract has expired cancel the service and use it as a pay-as-you-go option when you need it.
Check your bank charges and do some research to see what other options there are in the market. Review your electricity and water bills and make sure the meters are read every month and record these amounts if you can. If you’re in a freestanding home, phone or email the readings through on the due date to ensure the municipality is not just using an estimate. If you’re in a complex and your bills seem too high then question your landlord or the managing agent.
If you have a gym contract, do you use it? Perhaps you could change it to one gym instead of a national rate and save some rands. What else are you paying for that you don’t use?
10. Reduce spending on credit
Banks look at your credit history when assessing home loan applications, so it is important that you pay up debt and cancel accounts that you no longer use. Simply applying for more credit could count against you when your application is assessed. Try to get rid of debt and while it is helpful to have a credit card as a record of your spending, be careful how you use it and always pay the full amount due at the end of the month. Unless you are super disciplined, clothing accounts and other store accounts are designed to encourage you to spend more money, which you may think twice about if you were paying cash. If you don’t really need it, cancel it.
It’s important to draw up a workable budget that is realistic and that you can stick to. Decide what amount you will save each month and open a savings account or explore various investment options. This will soon accumulate into a deposit for your new home.
Changing the way you spend money will be preparation for when the time comes to apply for a new home loan as the bank will be looking at your spending behaviour to assess whether you can afford to buy a home or not.
Have you got any other ideas you’d like to suggest and share with us? - Julia Hinton
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