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Ultimate multitasking: How to save for a home while renting a home 

14 May 2019 | 7 min read

How can you save for a home while you’re paying rent?

That’s the challenge. And in our property market, it’s the ultimate act of multitasking.

Imagine having four walls that you own. Every single brick is yours.

You could put nails in the walls to hang prints and paintings. You could adopt all of the dogs and cats. You could paint walls. You could rip up the concrete courtyard, plant a lush and leafy garden and a veggie patch.

But you’re renting. How can you save for a home while you’re paying rent?

That’s the challenge. And in our property market, it’s the ultimate act of multitasking.

We want you to take that first step on the property ladder but there are things we promise not to do in this article:

  • mention avocado toast (or giving it up)
  • tell you to housesit
  • open an account with the bank of mum and dad

You could definitely take these steps but they’re not going to work for everyone.

Here are the things that could work for you.

Challenge 1: House hunting and goal setting

This part is a bit of a chicken and egg situation.

You can either:

  • work out how much you can save up for a deposit based on your current spending or,
  • decide on what type of place you want and save up the required deposit from there and budget accordingly.
  • Uhh, is there an option c? Can I phone a friend?

There’s no wrong way to do this but we’ve gone with option b (‘Lock it in Eddie!’). That’s because setting goals and visualising your perfect pad is an easy way to keep you motivated to save.

  1. Get a list together of all the suburbs you like the look and feel of
  2. Decide on whether you want your place to be a house, a townhouse or an apartment
  3. Use a real estate website to look at those areas with your current criteria. Don’t forget to look at suburbs nearby too
  4. Answer these questions: What price range are you roughly looking at? What is the average price for what you’re after?
  5. Decide how long you have to save and when you would like to buy

When you know roughly how much you will need to spend, work out what your deposit might be: If it’s a $300,000 townhouse, then you will need $30,000 for a 10% deposit or $60,000 deposit for a 20% deposit (more on this later!).

Warning! This is the part when you need may need to reel in your expectations about what and where you would like to buy. Some of the things you’re after may be incompatible so keeping an open mind is key.

For example, if you want to buy a $300,000 house in a suburb 10 minutes from the beach, that house might not actually exist! Instead, take a look at apartments in that area or houses further afield.

Doing the maths

So you’ve decided to go with a 10% deposit on a two bedroom apartment that will cost $300,000. You decide to save over the next three years (36 months).

$30,000 divided by 36 is $834 (rounded up). You have your goal! You will need to put away $834 into your savings each month for the next three years.

Next, you will be putting together your budget to see if you can afford to put this away alongside your rent.

Challenge 2: Budgeting

In a far away land, there are magical humans who enjoy doing budgets, spreadsheets and what some may call ‘involuntary maths’.

If you are not one of these magical humans, you need to face up to the fact that a budget, in a spreadsheet or an app, is a boring necessity. Budgets help you work out the dollars coming in, the dollars going out and what you have left over (Nagging time: If you don’t have anything left over, then you need to cut down your spending!).

Planning your own budget is essential to saving. It means you won’t spend more than you earn.

There’s a bunch of apps that can help you with this or search Google for a budget spreadsheet or set up your own.

What do I include?

You’ll need to track things like your salary or income and all of the things you’re spending money on, such as

  • Rent
  • Expected and regular bills like electricity, gas, water
  • Groceries
  • Lunch at work
  • Coffee
  • Phone bill
  • Car, contents and/or pet insurance and
  • anything else like your gym membership or that weekly brunch you have with your friends

Things like electricity and water may rise and drop depending on the season, so account for the maximum amount or factor in the changes.

Once you have this, you should have an amount left over. Some of this amount will go to fun things like lunch and dinner out, buying clothes, too many pot plants, holidays and road trips.

You might choose to put a cap or maximum spend on that (or even decrease the amount!). For example, if you’re spending around $12 on your work lunch every day, that’s going to cost you $60 per week and $240 over four weeks. Could you find somewhere cheaper or make your lunch at home?

And the rest? That can go to your shiny new savings account. It is recommended to save at least 10% of your salary. If you can manage 20% or 30%, that’s even better and you’ll reach your goals more quickly.

Challenge 3: Getting rid of that debt

Did you know that 75% of Australian households are in debt? Debt can be overwhelming but before you start saving, you need to clear any debts you may have.

The good news is that debt is temporary and if you’ve made the commitment to get out of debt, today is the most in-debt you’ll ever be!

In this handy guide here, we’ve put together 8 tips to help you get out of debt.

Here’s the basics

  1. Start a budget
  2. Work out what you need to ‘keep the lights on’ or pay for the essentials like rent, electricity, gas and water
  3. Face your debt. Work out what you need to pay to get back to 0 and factor that into your budget

Challenge 4: Finding a high interest savings account

High interest savings account are a handy thing to have. They usually sit alongside your ‘every day’ transaction account and it’ll be where you store all those dollars you’ve saved.

Interest is the amount calculated on the money you already have in your account that the bank gives to you as a ‘reward’.

Some high interest bank accounts have higher interest rates if you don’t touch your savings. Some will have a high interest rate for the first few months and then drop down to a lower standard rate.

These are all things to look out for and it’s worth doing your research and using a comparison tool to find out the best one for you.

Our high interest savings account sits at 1.25% and is called the EasySaver. Interest is calculated daily and paid monthly. Click here to find out more about it.

Challenge 5: The other things you need to pay for

When you save for a deposit, you’re aren’t usually just saving for a deposit ("What." - I know, right?).

When you purchase a home, you may also need to pay for things like

  • stamp duty (the tax you pay to transfer the title of your new home to you)
  • legal fees
  • moving costs

You can use our calculator here to find out if you’re eligible to not pay stamp duty, like some first home owners are. Otherwise, you’ll need to put a little bit more in your account to make sure you’re prepared for those costs.

That’s the challenge.

Have you ever tackled the challenge of saving while renting? Let us know your tips and tricks!

If you’re ready to buy a home, head over to our home loans page where you can find out more about the ins and outs of purchasing your place.

Note: This article contains general advice only. Readers should seek a trusted professional’s advice on financial matters.

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