Getting on the property ladder is an aspiration that many people have and that most of them spend a lot of time worrying about – it certainly keeps me up at night. But I speak as a kindred spirit when I say that you shouldn’t worry so much.
Why? Because you can make some (I was going to say simple but they aren’t easy) changes to your life. From getting granular with your daily spending to finding out how much money you really need to save, this is what you can do to feel a little less stressed about getting on the property ladder:
Get Really Granular on Your Daily Spending Habits
Not having enough free cash to save is probably your biggest worry as a hopeful homeowner and your daily spending habits are contributing to this – ask yourself if you’re prioritizing takeaways over being a homeowner?
Getting granular on what you’re spending your money on each day will show you where you can cut costs, allowing you to put more cash towards a property.
It’s really simple to track your daily spending habits; I do it myself and I use a spreadsheet to account for every single cent going.
My spreadsheet starts with my incomings and essential outgoings – rent and bills. I also add in the things I know that I spend money on every month, even those I know I can live without. I then take what’s left over, work out how much I can spend each week, and subtract every daily purchase from that total.
I’ll admit that I love spreadsheets, so I had great fun building mine. But if you’re not such a fan then you could use the Google Sheets budget planner, or use Mint if you’d prefer an app to do the job for you.
Take a Second Job or Start Doing Freelance Work
You might be doing all the right things to save money for a home – cutting back on the essentials and not going out – and still not have enough money to stop you worrying. If this is the case it’s because you’re not earning as much as you need to be.
Getting a promotion might not be an option, nor may moving to a new company, But that doesn’t mean you’re helpless – there are always part-time jobs and freelance work, it’s what my parents did.
In fact, when I speak to my parents about my savings plans one of the first questions they ask is “have you taken a part-time job?” And I can’t blame them, because they both did just that until they had enough money for a house – the home I grew up in.
Your choice is simple – are you going to take a second job or are you going to supplement your income by doing freelance work?
Move Back Home (Temporarily) With Your Parents
Rent is the biggest monthly expenditure for most people and it’s dead money – the total rent on your property is probably more than a mortgage would be to own it (I know, it’s sickening).
Moving back home with your rents might not be very appealing (who really wants to go back home when you’re trying to gain even more independence) but it allows you to save a huge amount of money. Plus, you can spend quality time with your folks
Let me put this into perspective for you: in my case, it would be over $6,000 every single year. And now I see it like that, I might have to tear up my rent agreement once lockdown ends.
It’s not just as simple as kissing goodbye to your rented home and turning up on your parent’s doorstep – work is a consideration. This means you have to ask yourself if your rents close enough to work for you to move there. Although, if lockdown has taught us anything, it’s that many jobs can be done from any address.
Find Out How Much a Lender Is Likely to Offer You
Let’s get one thing clear, knowing how much a lender will offer you is the biggest worry about being on the ladder – it’s literally the reason that all the other worries exist because, let’s face it, you don’t have the money to buy a home outright.
It’s the thing that directs all the other actions you take – how much money you need to save, if you need a second job, even if you have to move back in with your rents.
Lockdown has put the brakes on the meeting I was going to have with my bank, but it has not stopped me checking what I can get from a mortgage broker. I use Breezeful to find out how much money I’m eligible for, but it’s just one of the many great, free sites out there.
The important thing is that you establish how much money you need to save to be able to get both the mortgage amount and rate that you want.
This is because you might find that you have to make fewer changes to your life than you think to save the deposit you need. However, let’s be honest, it’s going to tell you that you need to make more changes than you’d like – homes aren’t cheap.
Recording your daily spending, taking a second job, finding out how much money you need to save, and moving back in with your parents aren’t simple solutions to your worries about getting on the property ladder.
But they are all things that you can do and each one will help you get on the ladder.
Are you a millennial? Do you own a home? Let us know in the comments below!