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How we saved our deposit: 3 stories

July 02, 2020

Saving for that first home deposit can feel like a daunting task. It’s probably the largest amount of cash you’ve ever had to come up with at one time, including that once-in-a-lifetime overseas getaway.

If you’re worried that the only way you’ll save for that deposit is to spend several years subsisting on bread and water, think again. We asked three people to share how they managed to do it. While they each took a different path, you’ll see some common threads in every story: you can save a deposit without sacrificing your lifestyle, a little help goes a long way, and the changes you make will definitely be worth it in the long run.

  • Jessica: Bought off plan apartment with a 10% deposit. Saved for 1.5 years
  • David: Bought off plan apartment with a 10% deposit. Saved for 5 years.
  • Fiona: Bought 1970's house with a 7% deposit. Saved for 2 years
The savings

“I knew I’d have to make some changes. I drew up a budget and looked for places to cut back. It was a lot of small changes, rather than one big one. I still met up with friends for drinks, but it would be a bottle of wine over at their place instead of cocktails at a bar.” – Jessica

“I’m not a huge spender, so the money just built up without me trying too hard. I still saw friends and enjoyed life. One day I realised that I had a considerable sum, so I looked around for an investment instead of leaving it in savings account. When I learned that it was enough for a 10% deposit on a new off plan property it seemed like the ideal plan.” – David

“Once we decided that we wanted to buy a house, it was like flicking a switch. Nothing else seemed important. We made a spreadsheet and started tracking all of our spending—it was pretty confronting to see how much we spent on take out food. We cut out alcohol and going out to movies. We swapped our expensive wood fired pizza nights for a $5 frozen Ristorante pizza at home (which is actually really good BTW)." – Fiona

The sacrifices

“I moved back in with my parents, which is hard when you’re used to living by yourself. Your parents are so much more interested in where you’re going at 9pm than a flatmate is.” – Jessica

“I didn’t splurge on a fancy car even though I wanted one. The more money I saved, the more I was tempted to buy something big, but I held off because I didn’t really know what I wanted to commit to.” – David

“We sacrificed the traditional wedding. If we spent $20,000 that was going to set our home buying back by years. So we scaled it right back. We held the ceremony in my Mum’s backyard with 35 guests. Ed wore a suit he already owned with a new $35 shirt. We didn't have a photographer. I did my own hair and makeup.” – Fiona

The spendings

“Saving for a deposit didn’t mean giving up all my luxuries. It just meant making choices more carefully. I wasn’t willing to give up having a bit of a party lifestyle as I was only 23 at the time and that time with my friends was important to me. I’d try and do it on the cheap by having a few drinks at home before heading out to save on alcohol. - Jessica

“I splurged when I wanted to. I like nice clothes so I bought nice clothes. If my mates went on a holiday, I went with them. Because I was happy to save over a long period of time, I had more freedom to spend than friends who were wanting to get a deposit together in a couple of years.” – David

“We weren’t really willing to give up weekend brunch. We cut it down to Saturdays instead of all weekend, but it was still an important part of our weekend. I also didn’t give up books or Netflix. I did swap from paperback to Kindle and gave up Stan but home entertainment was still important to us." – Fiona

The help

"My parents helped out with the deposit to try and get me into the market, as they knew the sooner I secured something, the better off I would be. I think this helped me to get into the market about 2 years earlier than I otherwise would have, as having them agree to chip in if I saved a certain amount was great motivation. We ended up going 50:50 in the deposit." – Jessica

“My family are very close, so my parents were happy to let me live at home while I worked full-time. I didn’t have to make rental payments, which meant that I could save a lot faster. I probably got into the market 3 years earlier than I would have if I’d had to pay rent.” – David

“We asked for no gifts at the wedding. Instead, if family and friends wanted to contribute to anything, we had a house deposit fund set up. Also, our families had wanted to contribute to wedding costs but we had that covered (it was only $7k) so they gave us the money towards a house instead. All up, we were gifted about 3% of the purchase price, which allowed us to buy at least 6-12 months before we would have been able to otherwise.” – Fiona

Where are they now?

Jessica moved into her brand new apartment as soon as it was completed. A couple of years later she was able to move into a larger home with friends and rent out the apartment for extra income. Eventually she sold it and used the now-substantial equity to fund a sizeable deposit on a family home.

As a single person, David knew that it was going to be tough to meet the mortgage and outgoings on his own. Instead, he elected to rent out his new apartment and stay living at home. Five years down the track, the rental income from his apartment covers his expenses with some income left over for him, making it easier for him to save up for the other things he needs. Now engaged to be married, he and his fiancé are about to move into the apartment together.  

For Fiona, weekends spent pottering in their new garden and working in the garage are worth every wood fired pizza they didn’t eat. They’re slowly renovating and landscaping the garden. “Knowing that it’s really ours, forever, makes everything better.”

"While everyone’s path to a home deposit is different, there’s one thing every story has in common. Nobody regrets saving. “Years down the track, I don’t remember the expensive dinners or new clothes I chose not to buy,” says Jessica. “What has had a huge impact on my life, and for the better, is buying that apartment. It got me on the path to building assets, and allowed me to buy my family home down the track.”

Another thing worth noting? None of them saved a full 20% deposit before they bought. In fact, most first home buyers don’t realise they can buy with as little as 5%.

Buying off plan is a great option for first home buyers, who can secure an apartment at today’s prices but then have up to two years to save the rest of the deposit. You can see what’s available off plan here.

*Independent is not a financial advisor. The information contained is for general information purposes only. It is not intended as legal, financial or investment advice and should not be construed or relied on as such. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before making any commitment of a legal or financial nature you should consider the appropriateness of the information having regard to your circumstances and needs and seek advice from a legal practitioner or financial or investment adviser.