Saving a deposit can be hard, like really really hard to do, so today I want to answer
the question Why can't I save a deposit?
If you feel like you're sabotaging yourself or just seems completely impossible to save
a deposit I want to give you some of the reasons why it seems so impossible and potentially
what you can do about it.
Hey I'm Ryan from onproperty.com.au your daily dose of property education and inspiration.
Every single day we release a video, podcast and blog post over at onproperty.com.au in
itunes or on youtube that you can go ahead and check out if you want to get your property
juices flowing.
So why can't I save a deposit?
When I email people and I ask them what is the biggest thing holding you back from investing
in property my number one response is that I cannot save a deposit, so it's very important
that we tackle this and you work out how to save the deposit cause the truth is you can't
invest in property if you can't save a deposit.
So the number one reason people can't save a deposit is the consumer culture that we
live in.
The consumer culture makes us feel like we are burning a hole in our pocket if we have
money that we have saved that we are not spending.
All of the advertising all around the world every single day we are exposed to so much
advertising that tells us to buy more things.
Heck I run a website and I encourage you to sign up for my programs onproperty plus which
isn't free and so I guess I'm a part of that consumer culture as we all are and so it's
very difficult to save and to stay motivated and focused and be happy when you've got all
of these things bombarding you telling you that you actually can't be happy unless you
buy whatever is new this week.
Now obviously that is not true but it does play with our emotions significantly and that
can make it extremely hard to deposit.
Number two is a lack of financial budget.
So if you've never set a budget for yourself, you don't know really how much money is coming
in, you don't know how much is going out or where that money is going then that can really
be, make it very difficult for you to save your deposit.
I find that a best way for me and my wife to budget is to actually set a weekly budget
and so rather than be well we're going to be spending $20 on entertainment and $50 on
food, $15 at McDonalds, $2 on coffee or whatever.
Instead of breaking it down and being extremely strategic about it we say well we have a certain
amount of money per week and we strive to live within that weekly budget.
That gives us the flexibility we need so if we don't feel like cooking at home that week
or we want to go to the movies cause the Hunger Games just came out that week then we have
the flexibility to do that but then I guess we just take that money from another area
of our lives.
I find that a weekly budget gives us a good flexibility but helps us stay on target.
So if you don't have a budget it's going to be very hard to save your deposit and I always
recommend when trying to save your deposit that you actually put that money away first,
like you do when you pay rent and you have to pay rent every week pay your deposit in
your savings because you have to save it every week.
Reason number three is you actually don't earn enough money.
You are just getting by, you're happy enough as you are, but you just don't earn enough
money to save a deposit or to save enough money that it would turn into a deposit.
So this can be very difficult if you are supporting a young family for example I am self-employed,
I am married, I have 2 kids and one on the way, now kids are expensive and so obviously
being the sole income provider for my family it does prove difficult at times to be able
to earn enough money in order to provide for my family and save enough deposit.
The key that I found in my life was to begin generating income on the side through a side
business.
For me that was internet marketing, starting websites and driving traffic to those websites
making money through that.
For you it could be a side business in consulting, it could be mowing people's lawns, it could
be doing stuff online like me there's so many different things you can do in order to earn
extra money if you don't feel like you have enough money.
Strategy number four is that you actually don't have a financial goal so you don't have
something that you're striving for.
I am very big on setting your financial true-north which I talked about on day 1 of the 30 day
property journey I did recently.
You can check that out at onproperty.com.au/day1and I talk about how you can set your financial
north and why that's so important.
But if you don't have a financial goal that you are striving towards like financial freedom
well then you're not going to be very motivated to save and if you have money and have no
future use for that money then it would make sense you spend that money today on something
that is going to make you happy today.
However if you have that future goal well that is going to help you to not spend it
today on happiness that it could create for you today so you can have it in the future
so you can have that happiness in the future.
So no financial goal can definitely stop you saving a deposit.
Number 5 is having no motivation.
So maybe you have a financial goal but you're not actually motivated to reach you don't
actually really care nothing pushing you forward it's not a pain in your life that's making
you say well I can't live like this anymore I need to save it or it's not a real positive
dream that you have for yourself and look in terms of motivation I'm not a motivational
speaker so I can't really give motivation or advice but I find that doing the right
things day in day out helps me stay motivated rather than some pep talk or something like
that.
But talking to friends is definitely helpful as well.
Sixth reason you can't save a deposit might be your deposit is too large.
You are trying to save too big of a deposit.
You may be trying to buy your dream home in the exact area you want to live and it's a
$1,000,000 and you want to save a 20% deposit plus stamp duty so you're looking at $250,000.
Who can save that much money?
People can't unless you're extremely rich.
$250,000 seriously?
Ok maybe you need to lower your deposit by looking at cheaper properties and potentially
looking to save less than the 20% deposit.
Yes you're going to pay lenders mortgage insurance but 5% is a lot less than 20%.
So let's say you lower that to a $300,000 property maybe 2 hours from where you live
and you use the 2 hour rule, well then you could look at 5% and that's $15,000 plus stamp
duty and other costs obviously.
So you have gone from $250,000 to $15,000 or $30,000 you can see the difference there.
There is a big difference.
So maybe your deposit goal is too high and you're making it impossible and maybe if you
lowered that goal start at a property that's maybe not your dream property but if you can
purchase it and get in the market maybe purchase something you can increase the value through
renovations or pick the right timing in the market and then you can kind of step up and
up until you get to your dream home.
The 7th reason that you may not be able to save a deposit is that you have a wife.
I have a wife and that makes it very difficult to save a deposit.
Ok now I'm just joking but yes having a spouse that likes to spend money more so than you
can make it difficult and you really need to balance both of your goals and ambitions
because truthfully if it was just me I could probably be a slave driver and live like a
homeless bum in order to save more money but my wife does not want to live like a homeless
bum and rightly so.
So we need to balance out my goals of saving money and moving towards a deposit and that
financial freedom and then her goals of actually not being homeless and actually living a decent
life now.
Because the fact is we are now at the prime of our lives and we need to enjoy ourselves
and so we shouldn't never spend money.
So if you have your spouse obviously talking to them is going to help you and try and balance
something out and come to a common ground where you both accept the situation and you
can both lock it in.
If I decide that this is going to be the budget and it's unrealistic for our lives well then
my wife's not going to stick within that, we're going to fight and nothing's going to
work anyway but if we set a common ground that we can work towards, sure maybe we might
not move forward as fast as I want being the homeless bum that I am and who tired arse
doesn't want to spend any money but we'll get there within a certain time frame.
So that might be some of the things that are holding you back from saving your deposit.
I hope that this has been helpful that you can identify what is holding you back and
you can make some changes to begin saving your deposit.
I'm going to be doing a full series on saving your deposit and so you can check that out
and all the different episodes by going to onproperty.com.au/deposit and if you want
to see the full transcription for this episode go to onproperty.com.au/242 because this is
episode 242 and so I'm really enjoying this.
I really want to tackle this problem of saving a deposit and help people like yourself save
their first deposit and get into the property market.
So until tomorrow remember stay positive