For many looking to buy their first home, money management is key. It’s no secret that it has become harder and harder to save a deposit, with New Zealand having one of the highest income to house price ratios in the world. While you don’t need to live an extremely frugal life in the build up to buying a house, having some form of control over your money is essential. Paired with inflation and rising living costs, understanding where your money is coming from and where it’s going has never been more important.
We take a look at 7 simple money habits that you can start to implement in your life. These will make you more aware of your money and management of money and will allow you to get on track towards buying a home.
Create a budget
Creating and sticking to a budget, gives you an overall plan of what you have coming in versus what is going out. It also lets you know where the money is actually going, so you are better able to adjust and manage it where necessary
Set financial goals and review them often
Setting yourself financial goals is one of the biggest motivators for saving money. Whether you are saving for a house deposit, a new car, or for renovations to your house, setting a financial goal (and sticking with it) is a motivator for many. You are now able to set up goals via most bank accounts, with trackers that show you how far off your goal you are. For many people this is a great way to be encouraged to save, and also makes you think twice before taking money out of the account.
Work to your budget, not your bank balance
Instead of going in to check your bank balance before buying something, check your budget. Your budget gives you a breakdown of whether you can really afford that item, or if something else will have to be sacrificed as a result of that spending.
Plan ahead with purchases
It’s a good idea to look forward across the year and work out where you may have upcoming bills or spending. For example things like annual bills (insurance, car warrant of fitness, dentist, etc) or holidays such as birthdays and Christmas. If you have a summer holiday each year, you might also like to factor this in, as well as any potential upgrades or updates you might do to your home, car, garden or technology. Having these mapped out give you a clearer view of how your year will look spending-wise and what you need to allow for.
Work to increase your credit score
If you have a less than desirable credit score, then you can work to improve this! By taking action such as paying off debt and making repayments on time, your credit score will slowly begin to improve, which in turn makes you more attractive to prospective lenders.
Ditch the buy now pay later apps
While things like Afterpay and Layby sound amazing, they can also be dangerous when it comes to overspending. It’s easy to get carried away with the idea of getting something instantly and not having to worry about paying it off until later on. While these apps do have limits imposed, these limits can be high and people can find themselves unable to meet the repayments. High interest then kicks in and suddenly that bargain dress you bought on a whim, doesn’t seem like such a bargain anymore.
Reduce and consolidate debts
If you have a number of debts, we encourage you to look into debt consolidation. This is where all of your debts are brought into one. This makes managing repayments much easier, and often means a lower overall interest rate.
If you need any advice around implementing any of these money habits in order to help you get closer to owning your dream home, then get in touch with the Better Choice team. We are only a phone call away!