Frugality Magazine - Frugal Living Tips for Financial Freedom

How to Save Money For a House While Renting

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Saving money for a house is tough at the best of times.

But if you’re already blowing a load of money each month on rent then things can really be tough. What’s the answer?

Having just achieved this dream myself, today I want to talk about some of the strategies and ideas that helped make it a reality. While I can’t guarantee they’ll all work for you, I do think they were instrumental in my becoming a homeowner.

Aggressively Challenge All Spending

If you’re like most people, then you probably don’t have much money left at the end of each month to put towards your house deposit.

This means you’re going to accept some serious changes to your lifestyle if things are to change. You may have to give up things you consider “essential” to reduce your spending.

This is where a concept known as “challenge everything” can come in handy.

Sit down at the end of each month with a notebook, pen and your bank statement.

Go through it line-by-line looking at what you spent. Try to figure out which expenses can be reduced, and which ones can be eliminated entirely.

Here are some examples…

Spend Less on Rent

Rent probably makes up one of your biggest monthly expenses. If you’re struggling to save money then it’ll probably be some years before you hit the saving target you have in mind.

In the meantime, could you reduce your rent payments somehow?

  • Does moving to a cheaper property make financial sense?
  • Or how about subletting a room (if your contract allow it)?
  • Or maybe even moving back in with parents temporarily?

Reduce Your Grocery Spend

Food is another big expense for most of us. But there are almost always potential savings here.

  • Stop eating out.
  • Reduce alcohol consumption.
  • Eat less meat.
  • Swap from well-known brands to stores own brands.
  • Grow your own vegetables.

The list is almost endless so figure out how you can spend a little less each month and turn it into a game.

Swap Your Utility Providers

We all need water and electricity. Living without a cellphone is almost unimaginable these days. But there are almost always cheaper alternatives out there.

Shop around and you may well find that with just a few painless phone calls you can switch from one supplier to another, leading to a near-instant saving on your monthly bills. 

Pay Off Your Debt

There are two great reasons to pay off those credit cards and overdrafts before buying a house.

Firstly, it’ll reduce your monthly expenses – so you can save more aggressively.

Secondly, you’ll look like a safer bet for mortgage lenders, meaning you may find it easier to get a cheap deal.

Go on a Spending Freeze

If you want to go “all in” then consider a “spending freeze” where you consciously spend nothing other than the absolute essentials.

You may choose to do this for a day, a week or even a month.

Either way, it’s an effective (if rather extreme) way to kickstart your deposit savings.

Take on More Work (Or Get Paid More for the Same Work)

While reducing your monthly expenses is a great place to start, it also makes sense to consider your income.

  • Could you take on an extra job part-time?
  • Could you swap to a new employer with a higher salary?
  • Could you even negotiate a pay raise in your current role?

Personally I relied on some supplementary income from my blogs to pump up those savings each month, which made quite a difference in the end. 

Lock Your Money Away

Between earning more and spending less you should be in a position to really start making progress.

The problem is that the ever-growing deposit you’re saving can be a real source of temptation.

After all that hard work the last thing you want is to have a moment of weakness and spend it on a vacation or a new car.

So try to “lock” your savings away where they can’t be touched easily. That way you won’t need to be quite so disciplined all the time. 

Track Your Progress to Stay Motivated

Money is a weird thing in that it’s so difficult to visualize.

After all, it’s not like you’ve got a physical pile of cash in a jar that you’re adding to. You can’t sit back and admire how full the jar is. It’s all just numbers on a screen, and they can change all the time.

Once thing I find beneficial is keeping track of my finances.

Use a notebook or a spreadsheet – your choice.

The important thing is checking in regularly so you can see that all your efforts really are paying off. 

Give Yourself Little Rewards

All this frugality and self-control is great, but it can only last so long.

I therefore think it’s important to give yourself a little treat every so often. In this way you feel more motivated to hit your next target.

So decide on a goal ($X saved, for example) and work towards it.

Then take a pitstop to enjoy your achievement (meal out, new video game etc.) before starting work towards your next goal. 

Conclusion

Saving for money while renting isn’t easy unless you’re earning a ridiculous amount of money. I most certainly wasn’t, so the process required sacrifice and self-discipline.

That said, this is a process that you really only need to once.

And I’m proof that if you stick with it, you can save up enough to make your dreams of homeownership a reality. 

Do you have any further questions? What has helped you to grow your savings? Please leave your thoughts and experiences in the comments section below so other readers can benefit…

Renting a property can eat up most of your money - so how are you meant to save a house deposit so you can buy your own property? In this article I explain how I did exactly that over the last few years. Find out how to save money for a house while renting - it's a lot easier than you might realize when you follow these tips.

Richard

Sun-worshipper and obsessive frugality blogger. For loads more money-saving advice come and join us on Facebook.

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