Ep8: Deposit Hacks - 6 Tips for Kickstarting Your Deposit Savings Journey

Welcome to the Home Loan Insider.

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I'm Max Lending, your industry insider.

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And we're lifting the lid on the finance market, guiding you on how to cut through the jargon, manage your finances and get investing into the property market.

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I work all night.

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I work all day to pay the bills I have to pay.

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That's right.

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Today's episode is all about money, money, money.

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Or should I say savings, savings, savings.

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Clearly I won't make it big with my singing skills.

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And that's the topic of today's episode.

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Savings.

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Embarking on property investment is an exciting venture and to be honest.

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To the dismay of a lot of you out there, it requires dedication and sacrifice.

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I'm not talking about a New Year's gym resolution that lasts 2 weeks.

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I'm talking about setting savings goals that require a fundamental shift in your psyche that's going to last years.

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Today's all about tips on how to save for that ever elusive home loan deposit.

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And I'm not talking about saving 20K.

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No, no, noI'm talking about real money, $200,000.

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So get yourself a cup of coffee, get comfy, 'cause we're about to get stuck into it.

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All right, I'm gonna go on a bit of a rant here, but 20K in savings is cute, but it's not gonna get you anywhere.

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200K is serious, and it's time you probably get serious.

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Property's not cheap, and being fooled that you can buy a property for 20K is laughable.

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200K is actually a realistic target and allows you to purchase with confidence.

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Also, pay that deposit, pay the stamp duty, and have some money left over so you can actually make the first few months of mortgage repayments.

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Some of you are probably mad right now at what I'm saying, but I really don't care.

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I'm not here to pander to you and make Instagram reels about cutting $3 from your daily budget and how it's going to set you on the path of home ownership.

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It's all about being serious, and it is time to get serious now.

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And that leads us to our very first tip, setting clear goals and a clear budget.

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You need to have an understanding of your numbers.

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Everything I'm about to say is useless.

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If you actually don't know what your numbers are and do a budget, I should be able to ask you how much do you spend each month on going out to dinner, and you should be able to recite that answer back to me without any hesitation.

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If you don't have a firm grip on your figures, just quit now.

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You know how many people I talk to who don't even know if their wage figure that they quote me includes superannuation or not?

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Seriously, like, what did you sign up to when you got that job?

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It's time to get together.

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Next episode, we'll actually go through on how to do a budget for those out there who need help.

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After you've done a budget, you can see what you're playing with.

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You can now set a realistic goal.

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This could be $100,000 in savings, or even 200K in savings.

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If you want to break it down into smaller chunks, be my guest.

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Sometimes saving the 1st 10,000 can help you be motivated to actually save the next 10,000.

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Whatever works for you.

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But set that goal.

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Stick it to the fridge, tattoo it to your forehead.

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Whatever it takes to get you to actually do it.

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You need to see the budget as the beginnings and framework of a sound financial plan.

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Implementing the framework will achieve the goal.

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After you've set your goal, it's time to switch to savings mode.

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The second tip would be to create a dedicated savings account.

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At the time of recording, the average yield on a savings account is about four to 5%.

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Make sure this account though is separate to your everyday account and you have no card access.

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The point of this account is to put money in, not take it out.

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It might actually be best to consider choosing an account that has a competitive interest rate that's actually different to the bank.

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That you have your everyday account with.

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The separation's going to ensure that it's not going to be so quick and easy for you just to transfer the money across when you feel, how do I put it, lacking willpower.

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Do not set up an account and think that you're being clever by transferring all your money into the Maximizer and taking it out when you need it.

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This breeds really bad behaviours and habits.

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and you're not gonna feel guilty when money actually comes out.

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You're only really gonna be saving, what, a few extra cents if you do that correctly, and most likely, you're not gonna save anything at all.

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Money is to go in and only come out when the house is ready to be bought.

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Remember, this account is for savings for your home loan deposit.

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Put your daily spending money into your everyday account and forego the 4% interest on your couple of hundred dollars that you've got, it's nothing.

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Now, I'm also not a huge fan of setting up 1600 separate different yield accounts, all called something different, like splurge, holiday, emergency, school fund, house fund, clothing fund, medical fund, investment fund, future fund, eating chips fund.

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Have $50 in each one of those accounts.

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It looks dumb, you feel dumb, and it gets you nowhere.

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Have no more than three accounts.

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Account one is to be your working everyday account and two.

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High yield savings accounts maximum.

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Call them what you want.

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You're a big boy.

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You can work it out.

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From here you need to automate your savings and then that's tip #3.

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Automation eliminates the need for a constant manual effort and ensures that there's like a constant flow of funds always going into your deposit or your home loan savings fund.

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Treat your savings though like it's a non negotiable bill.

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It has to be a priority each month.

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Make savings seamless.

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Make it part of your team, and you can do this by setting a automatic transfer that is debited from your savings account.

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People actually can ask their payroll department if you didn't know this to set a dedicated amount to be transferred off their salary each month into this separate account.

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But look, realistically, you're not going to do that if you're working for a big organisation.

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I 100% guarantee you don't even know payroll's e-mail address.

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Make your life easy and set up a direct debit that comes out of your everyday account a few days after payroll day or payday.

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That way it allows for any errors if payroll was late.

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Make sure though you don't over commit and have a realistic amount being direct debited into your high yield savings account each fortnight or each month, however you get paid.

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If there's actually any leftover money at the end of each paycheck, you can then choose to manually transfer that smaller amount across yourself.

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OK, tip #4 is to trim any unnecessary expenses.

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After you've done your budget, it's going to highlight where all your money is going each month.

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Take a critical look at the spending habits and identify areas where you can cut back.

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Small sacrifices like dining out less frequently can actually add up to be quite significant overtime.

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Redirect these savings into your home loan deposit fund.

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The biggest one my clients are finding large amounts of savings each month are from Uber Eats and excessive streaming services.

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With Uber, the service fees and delivery fees really start to add up and they cost a fortune.

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So maybe it's time to learn how to cook.

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Look, people have been doing it for centuries.

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Give it a try.

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With streaming services, one is probably enough.

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Any more than that, you're getting a little bit crazy.

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Can you actually possibly watch that much TV?

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If you still can't find any sort of significant savings from cutting back in your budget?

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Well, look, it actually might be time to start exploring additional income streams.

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And that's tip #5.

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If you said to yourself before, oh, I need more than one streaming service because I'll watch a lot of TV.

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Well, guess what?

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You've probably got time then to also source an additional revenue stream.

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I'm not talking about starting a side business or anything like that.

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Let's be realistic.

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Starting a side business sounds cool, but will cost you more than you make in the beginning, and it's going to take a very long time before you see any rewards from it.

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I'm talking purely getting some extra cash each week to go towards your savings goals.

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You need to think more simply.

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You can potentially pick up some casual weekend work, maybe even drive for Uber Eats instead of ordering for Eats each time.

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If you've got skills that can be translated into freelance work, you can do that.

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Or even if your current job has overtime available, maybe put your hand up for it.

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You can do the extra work until you hit the savings goal, then actually just quit.

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Go back to normal.

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Be creative.

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Find opportunities that align your skills.

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I'm not going to sit here and list 15 different ways you can make extra money.

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If you really want to save for the deposit, you'll make it happen.

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The goal should be able to keep you motivated.

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Last of all, be patient.

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Don't hate yourself if you're not saving as quickly as you like.

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Saving with purpose, though, will make the task a lot easier.

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Story time.

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I once had a client that had saved $100,000 and they came to me to point out the house they wanted in the area that they wanted to purchase in.

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After going through all the figures with them, it worked out they needed just $80,000 more to cover off all the costs and get into the house that they actually wanted.

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You should have seen the look on their face.

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I knew they were defeated in sight, but on the current savings rate, it was just going to take them another 1 1/2 years.

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And they would have had all the money they needed.

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Now I checked back in with them three months later to see if they were still on track for their savings goals.

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And guess what they did?

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They bought 2 second-hand cars for 50K each.

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What a bunch of idiots.

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All that hard work was thrown down the drain and now they have no savings again.

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It's not even like they bought cars because their other cars were broken.

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It was just that they were being mentally weak.

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Being patient is actually a skill.

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I know with YouTube, TikTok and the rest of social media, it's rotting everyone's brain out there and people have the inability to be patient for anything.

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But that was ridiculous.

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If you don't want to become like them, then you need to pull your finger out and get serious.

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Here's a bonus pro tip for you.

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Research government programs, grants and initiatives that support first home buyers.

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Many state governments offer assistance to individuals saving for their first home.

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So get familiar with the eligibility criteria and take advantage of these opportunities.

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It will give your savings the boost that they need.

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But hey, you know what?

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That requires work.

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And I'm going to assume majority of you, you're not going to do it.

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If you don't like my attitude, prove me wrong.

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Jeez, well, I just listened back to that.

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I was a little bit angry in that episode, wasn't I?

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Obviously woke up on the wrong side of the bed.

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Look, savings takes time.

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Make a budget, set a goal, create a separate high yield savings account, and cut back on some of those expenses.

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It's not rocket science.

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Be patient.

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The savings will start to snowball and before you know it, you'll have some serious money saved up.

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Thank you guys as always for listening.

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Keep up the great work and I'll see you in the next one.

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If you have a question that you would like answered on the show about budgeting, mortgages or finance, then drop us a line either via our socials, e-mail or website.

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Details available in the show notes.

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Any opinions and views expressed in this program are just that opinions.

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All information is general in nature and should not be seen as financial, economic, legal, investment, accounting or tax advice.

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This program makes no representation or warranty as to the accuracy or completeness of any information contained in this program.

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You should consult a professional advisor in relation to your own personal circumstances.