First up, saving is hard. You have to think of money in a completely different way, and that’s frustrating at times.
However, it’s also pretty addictive seeing the money slowly but surely start to add up.
This post is not at all meant to boast or lecture, it was just an idea after a really interesting conversation with a friend about advice on how we managed to recently save a deposit, and the ways we somehow managed to make our money work for us over the last few years. It doesn’t guarantee you’re going to be offered the same opportunities I was from banks, but if you can find something similar, it’s well worth a little extra effort for some considerable gain!
Sign up to an ISA
I have been putting the maximum allowance I can each month into a help-to-buy ISA since it was launched. Lots of banks offer it, but as I already had a Halifax account, I just opened one up with them. The general jist is that you can open it with a deposit up to £1,200 and then save anything up to £200 a month for your first house. As long as you don’t touch that money, when you come to buy, the government will give you an extra 25% on top of all of your savings! Just watch out, as we ended up not being applicable because we bought a house over £250,000, so there are some limits. Still, it’s literally the best scheme going at the moment even if you’re not sure when you might be able to buy, if you’ve got any spare cash each month, getting 25% extra is SO worth it! (For houses over £250k, they’ve also just brought in the Lifetime ISA, which would be applicable, just for us unfortunately it was only brought about a little too late!)
This is the one no one particularly enjoys, as it can be pretty boring, but realistically, it’s the only way you’re actually going to save the big bucks. Yes, it might mean biting the bullet and moving back in with your parents for a bit to save on rent and bills, it means saying no to big holidays, new cars, or even buying clothes every month. Between us, we’ve tried for the last few years to save each and every penny we can whenever it might have otherwise been spent on something unnecessary. I’ve still managed to go abroad, we’ve just chosen cheaper places for a shorter time and out of peak season. I still have a full wardrobe, I’ve just tried not to buy too many new items, and when I have, made sure they were occasional treats. Work out your priorities and take it from there…
Juggle your money
When you’ve managed to save up the first few thousand, rather than letting it just sit in your current account collecting dust (because, let’s face it, interest rates are abysmal currently!) we spent a day or so working out and researching in which banks we could get the most interest. Therefore, I currently have about 7 bank accounts to my name, all with money that went in and came out of them. Online banking is your friend, yes siree, and if you work it out well enough, there are lots of banks who offer 5 or 6% interest up to £2k, as long as you pay in at least £500 or £1000 a month. All we did was set up the account with the maximum allowance for interest, then automatically move that £500 into the account on one day, and back out the next. It’s a faff to get your head around at the beginning, but once it’s all set up you don’t even have to think about it.
FYI, I had accounts that gave either 5 or 6% interest with the following banks: First Direct, TSB, Halifax, Santander & Nationwide (though check on moneysupermarket which are currently offering the best rates).
Watch the pennies
The age old saying your granny probably told you, watch the pennies and the pounds take care of themselves…well, granny was right. If you constantly think about actually what you’re spending your money on, and give yourself spending limits each day/week/month, it doesn’t end up getting out of hand. We tend to buy a lot of things through topcashback, so we basically get discounts on most purchases online. We’ve got into the habit of making people gifts, homemade things they actually really love, which genuinely seem to go down quite well. There’s also the option to look for offers and bulk buys and good as new second hand alternatives. Ebay, Gumtree and Facebook selling sites are great for this!
Work your butt off, and find other ways of making money
We both have full time jobs. As an environmental consultant in the south west, my salary really isn’t that high. However, both of us have other ways of bringing in extra money on the side to save. I have this blog for instance, which, though only a small trickle now and then, still can make a bit of extra, and Adam has his woodcraft business, Oaken Husbandry, where he has had quite a roaring trade for handmade oak duckboards, and actually does bring in quite a steady stream of cash. As long as you keep all of your receipts and fill in the appropriate tax forms each year, making that little bit extra really can help! Alternatively, work your way up the property ladder and make some money that way, start by buying somewhere smaller and ugly, make it beautiful and sell it on for more than you bought it for. We did this with the flat, and whereas I could save by living with my parents, Adam gathered a lot of his deposit for the house from the capital we gained. From a lot of hours put into DIY projects, doing most of the work ourselves, and increasing the value of the property!
It takes time
Unless you are lucky enough to have a stonking salary, barely any outgoings and a lot of money to spare, to save £25k each takes a long time. If you need a deposit of this size (or potentially even more), you unfortunately might just have to wait for it. I have been saving back up since I left uni with £3k to my name (I worked pretty much throughout my degree so luckily never got into debt) and since then have lived with my parents during the week. It’s been nearly three years of really hard saving, keeping weekly tabs on how much was in my accounts and slowly slowly watching the number grow.
Even though I now have the least money I have ever had to my name, though cash poor, I’m asset rich, and the very proud owner of a beautiful house. Yes, there are lots of things we are looking forward to doing to it to make it even more beautiful, but once again these projects will have to wait until we’ve saved up enough to do them. Hopefully some of these tips helped, I hadn’t even considered that we had much of a game plan when it came to spending, but once you sit down an think about it, I’m glad we tried to be tactical with money wherever we could, and I honestly don’t feel like we had to miss out on anything.