Getting ahead of your finances is difficult enough sometimes, but for first home buyers with bad credit or a poor savings history, dealing with their finances can be even more challenging. With tougher rules to meet nowadays before first home buyers can secure a home loan, getting ahead is proving more and more gruelling for young Western Australians.
Here we take a closer look at the top 3 bad money habits that are preventing many first home buyers from entering the property market in Perth.
Habit #1 – Not Budgeting
Outlining how much income you earn and determining your expenses may seem simple enough, yet many young people fail to realise how important budgeting is when it comes to saving for their first home deposit. Budgeting is an essential tool you can use to manage your money and to determine how much you can be putting away towards your first home loan. To learn how to develop a budget, click here.
Once you have determined your budget, it is important to track how much you are spending on a daily basis so that you can see first hand where your money is going. Kicking this bad money habit will get first home buyers into their own homes much quicker than expected.
Habit #2 – Staying in Debt
If you don’t have a budget and you are spending more money than you actually earn, it is likely that you’re relying on credit to get by. While credit cards can be useful for first home buyers for building up your credit rating, if you aren’t meeting your credit card repayments, your chances of securing a home loan can be diminished.
A technique that many people use to manage credit card debt is debt swapping, whereby balances are consolidated and/or moved to lower interest credit cards. While this can help you in the short term, it won’t get you any closer to your first home. The only real chance home buyers have to get out of debt, is to develop a budget.
Habit #3 – No Savings
If you can relate to the above two bad money habits, chances are that you also have no savings, which perpetuates the bad credit situation. When you have three to six months worth of savings, this can go a long way towards a deposit for first home buyers.
Kicking these bad money habits and developing a savings mentality can be challenging but remember, every dollar does count. Starting small with $50 a week adds up to $2600 a year. Now wouldn’t that be nice to see in your bank account?
Have you been struggling to get into a home of your own because of financial difficulties? At No Savings our goal is to open the door to home ownership for as many West Australians as we can. We specialise in helping first home buyers who have had trouble obtaining finance before with our no deposit home loan options. Contact us today and see if you qualify.