There’s no escaping it; living in Australia is expensive. In fact, Australia has been rated by Deutsche Bank, for the fourth consecutive year, as THE MOST expensive country to live in, yikes. With the cost of living so high, and housing costs even higher, how are we meant to save money? Is it possible to save money even with a home loan?
Well, the simple answer is yes. The more complex answer is, it depends. Of course, your salary and expenses are different from other readers, but with some planning it is still possible to save money while paying off a home loan, and you won’t have to eat 2-minute noodles for the rest of your life.
Budget, budget, budget.
If you haven’t already set up a budget, now is a perfect time. A budget will give you an overview of your incomings, outgoings and your financial health in general. Be honest and account for everything. Spend a few weeks familiarising yourself with what your actual expenses are. We all like to think we are frugal, and it is easy to forget that $5 coffee every morning takes its toll on our bank accounts.
After a few months of playing around with your budget, you should have a clear idea of how much money you can put aside for savings. It doesn’t matter if it’s only a few dollars a week; consistency is key. But what about a home loan? The cheapest home loans are usually offered with a variable rate of interest, which makes repayments hard to budget for.
The interest rate on a variable rate home loan is derived from the rate set by the reserve bank of Australia. Currently rates are very low, good for people looking to take out a home loan.
Variable-rate home loans are cheaper than fixed-rate, but as interest rates fluctuate, so too does your repayment rate. For someone who is on a strict budget, a fixed rate home loan is the perfect solution. The best fixed rate home loan will have consistent repayments, allowing you have complete control over your budget.
Tricks and tips.
Creating and sticking to a budget will free up your finances and give you room to breathe. A fixed rate home loan gives you confidence and peace of mind and allows you to plan for repayments. Getting these two aspects under control should be enough for you to start saving money each week/fortnight/month, but is there more you can do?
Absolutely! Here are some of my favorite money saving tips:
- Eliminate excess. For me, I found Netflix boring and unnecessary; instead of watching TV I go outside and walk my dog, it is free and healthier. Eliminating unnecessary expenses is the number one trick for saving money.
- Take up a hobby. It would seem strange to suggest taking up a hobby when the goal is to save money, but a hobby can not only exercise your mind and keep you happy, but has the potential to turn into a side earner.
- Sell your stuff. It astounds me how much ‘stuff’ we all have. Sites like facebook marketplace and gumtree are free to use and have a large user base.
- Cook your own food. Preparing your own food not only makes you more attractive to potential mates but can save you big money.
Saving money is very doable, even with a home loan. Stick to a budget and find the best fixed rate home loan for your needs. Australia is an expensive place to live, but I wouldn’t live anywhere else.