If you’re hoping to buy a new home, the first step is saving for your deposit. But looking at the target figure can sometimes feel overwhelming. So, here's the good news – buying a home is within reach if you set a clear savings goal. With some small everyday changes to your spending habits, you can grow your savings quickly. Read on for practical savings tips.
Identify an achievable savings goal
A ‘little and often’ approach often proves to be effective for new home buyers – building momentum while keeping your lifestyle balanced.
When planning your savings goal, be realistic about what works for your circumstances. Setting overly ambitious targets can quickly become discouraging if they’re out of reach. But you should also allow yourself room to enjoy life along the way – saving for your new home shouldn’t mean missing out on activities and putting your current happiness on hold.
Set a deadline
Setting a deadline can transform the savings process, giving you direction and motivation. Once you’ve marked a date on your calendar, you can work backwards to create a monthly savings plan that feels right for you. By doing this, you turn what seems like a distant goal into manageable, monthly steps.
Calculate how much to save
Having a well-defined savings goal is the foundation of your homebuying journey. By establishing exactly how much you need to save for your new home, you'll stay motivated and make smarter decisions about your monthly budget and savings contributions.
When setting your target, it's important to be realistic about what works for your lifestyle. Take a moment to review your monthly income alongside your current living costs - including rent, bills, and everyday essentials. Then consider the type of home that suits your needs and the locations you're drawn to.
Create a budget
Many potential homeowners find that a monthly savings target of around £200 works for them. Based on average UK earnings, this amount typically enables you to make significant progress toward your deposit while maintaining your current lifestyle.
However, it may not work for everyone, so you could try a budgeting rule like 50/30/20 or 80/20 budgeting:
• 50/30/20 budgeting is when you dedicate 50% of your income to needs, 30% to wants and the remaining 20% goes into your savings.
• 80/20 budgeting is when 80% of your income goes towards spending, while 20% goes into your savings.
Choose a savings method
Finding the right savings account is just as important as finding your ideal home. Different options suit different people, such as:
• An instant access savings account gives you the freedom to manage your money on your terms. While these typically offer lower interest rates, they provide the flexibility to access your funds whenever you need them, making them ideal for unexpected expenses that can arise.
• A Lifetime ISA is great for first-time buyers who are focused on building their deposit and don’t need instant access to their savings. This government-backed scheme allows you to save up to £4,000 each year with a 25% bonus on top - that's up to £1,000 annually.
Make lifestyle changes
While you shouldn’t compromise your current happiness to achieve your savings goal, there are things you can do to help you reach your target.
Switch up your supermarket
Your choice of supermarket might be down to convenience. But by travelling a little further, you could make significant savings, leaving more budget for your deposit.
Shop around and see which supermarket works out the cheapest – you might be pleasantly surprised by how much you can save with this simple change. You can also make the most out of deals and reduced items, while changing to own-brand products can also save you money.
These small adjustments to your weekly shop can make a remarkable difference to your savings journey.
Sell unwanted belongings
One person’s trash is often another’s treasure, so boost your savings by selling items you no longer need. Pre-loved books, clothes, gadgets or furniture could be worth more than you think!
Platforms like eBay, Gumtree and Vinted make it easier than ever to connect with people who will appreciate your unwanted items, while weekend car boot sales can turn a fun morning out into a profitable adventure.
Make everyday changes
While it might seem like a small step towards your savings goal, consider adjusting your everyday spending habits. For example, taking a packed lunch to work instead of spending £5 a day (which adds up to over £1,800 a year) can contribute to your savings. Consider balancing going out with staying in – inviting friends over can be just as fun and more affordable, as you save money on food, drinks and transport.
Got a gym membership you haven’t used in months? Have a Netflix account that you aren’t making the most out of? Perhaps you forgot to cancel a subscription after the free trial ended? Cancelling unused direct debits is an easy way to add vital funds to your savings pot.
For an extra boost, consider adopting the 30-day rule. Instead of heading out and buying things on a whim, wait 30 days to decide whether you really want or need the item. If you don’t, that money can be put away into your savings instead.
Track your progress
Watching your home fund grow can be one of the most rewarding aspects of your journey to homeownership. We recommend tracking your progress by checking your savings account regularly.
Many potential homeowners find that their banks' built-in savings features, such as customisable savings pots and the option to round up spare change on every purchase, make this journey even more satisfying. This makes it easier to visualise your progress and keep those house deposit funds safely separated from everyday spending.
Consider multiple savings accounts
Setting up separate savings accounts is a smart way to stay in control of your financial goals. By dividing your savings rather than keeping everything in one place, you can clearly track your progress toward each important milestone – whether that's saving for your home deposit, planning for future renovations, or setting aside emergency savings for any unexpected costs.
This approach also gives you the flexibility to choose different savings products that work best for your circumstances. For example, you might place your house deposit savings in a higher-interest fixed-term account. Shopping around for competitive interest rates across different banks means your money works harder for you at every stage of your homebuying journey.
Stay motivated
Maintaining your motivation while saving for your home is essential to reaching that exciting moving-in day. By following the steps we've shared, like setting achievable targets and creating a practical budget, you'll build momentum that carries you forward.
Regularly checking your progress gives you those all-important moments to celebrate how far you've come. Each milestone reached brings you one step closer to opening the door to your new home.
Explore our brand-new homes across the UK, with fantastic offers to help you move.
Related Articles
-
- Apr 12, 2022
14 pieces of advice when buying your first home
-
- Oct 30, 2023
Top tips on how to save for a house in the UK
-
- Apr 11, 2024
What is Shared Ownership and is it Worth it?
