Big changes we had to make to buy our house

Saving for a home requires consistent effort. It’s great to look at all the little things you spend on that add up – but sometimes you just need to take a sledgehammer to all your costs and start over.

What can you do differently? Thinking outside the box about where you can save money by cutting your expenses and increasing your income will ultimately fast track your savings and get you into your home sooner.

Reducing your expenditure requires you to know where your money has gone. Having a realistic budget and tracking your money is the first step. What is an essential, what is a nice to have, and where can you target your savings?

Ravi saved up for his house by avoiding the temptation of unnecessary spending.

“I set up automatic payments for bills, emergency funds and savings on the same day as payday,” he says. “This will ensure everything you need to pay for is covered and you know where your money is going.”

Using our budgeting tool can provide the tools to plan and think about where you want your money to go and, used together with our new savings calculator, can show you how long it will take to get there.

Can you change your living situation?

Housing is probably the biggest cost in your budget – I know it is for me. And sometimes our current living situation gets in the way of saving to buy our own home.

Priscilla found this while saving for a house. She focused on reducing her expenditure to get ahead and reach that goal faster. After cutting as much as she could, she looked at rental costs.

“I opted to share my current rental with a flatmate to lower my general expenditure,” says Priscilla. “I also have a designated savings account to keep everything separate.”

Identifying different ways to achieve your goal and making some sacrifices can boost savings. Strategies to reduce your rent is money in your pocket and not the landlord’s.

Priscilla says “It is challenging as a single to buy a house and I have had to look at creative ways to do it. I’m looking at buying a house with a friend or buying in different locations because of lower house prices.”

We spoke with Auckland couple Rosa and Jess, who have been through something similar – here's their story. They bought a house with Jesse’s sister and her partner, sharing it for five years. As they grew their families, they ended up with seven people in a four-bedroom home.

Can you make big changes to your savings? The benefit with a budget is you can see where costs add up and think about how to save more radically.

Making the most of KiwiSaver

What if you contributed 10% to your KiwiSaver instead of the standard 3%? Sometimes the most radical change isn’t that radical after all – the solution was there all along. Sure, 10% feels huge compared to 3%, but it’s this kind of savings that adds up.

Remember, if you have been in KiwiSaver for three years, you can withdraw almost the whole thing (leaving $1000 in there) to use as a deposit for your first home. It’s a great way to save.

Start from the standard 3% and use the our Kiwisaver calculator to see how much you can save based on the different percentage contributions. If increasing your percentage contribution is too much, you can always make voluntary payments.

Even better, can your employer contribute more? (Or can you find another that does?)

Workwise, it’s a whole new world

COVID-19 has changed the job market. This provides the opportunity to think about work and your ability to save money in a whole new context.

Negotiating to continue working from home could save money. Many companies offer flexibility with hybrid options or full working from home. Cutting the commute can save you lots on petrol per week and costs like lunches in the office.

Larger savings can come from cheaper house prices if you can live further from work. If you are priced out of your current neighbourhood, this can also be a great opportunity to try out a region that is more affordable.

Hannah saw the opportunity to move to a smaller regional town and save money on the price of a house. "I was in the process of designing a home to build in Auckland, but as we got closer to finalising the plans, the price got higher and higher, until we were hundreds of thousands over our initial budget,” she says.

“We ended up having the opportunity to move to Taranaki, where we've been able to buy a home that is similar to what we were building in Auckland but for less than the price of just the build alone." Making a big life change has saved Hannah and her partner a lot of money.

“The idea of packing up and leaving our friends and the city we’d spent most of our lives in definitely felt radical, but now that we’ve made the move, it’s been so worth it and hasn’t been as hard as we thought.”

It’s not just about spending less, but earning more

It pays to remember that a budget covers both income AND expenditure, so get creative with both! If you can work from home, use that commute time to research and develop a side hustle – this could potentially add another income stream to your savings.

The job market is running red hot! Are there jobs available that pay more elsewhere? With demand for key skills at an all-time high, it could be a good time to dust off your CV, evaluate your skill set and look at your options. Check out more ideas here.

Understanding your worth and the value of your skills is an important part of the equation in a hot job market. This knowledge means you can either job hunt or push your current employer to give you a pay rise and ensure you are earning (and saving) as much as possible.

Where do your opportunities lie?

Ravi views his budget as a creative springboard. “It provides the motivation to make the necessary sacrifices of things such as travelling or spending now, by thinking of the bigger picture to achieve your long-term goals.”

It also provides opportunities for radical assessment and big changes.

So take that first step. Look at your budget and make your plan – you never know how much faster you could get there!