Acquiring that new home in Melbourne can be a daunting task. You must perform ocular visits to scout for the best location and best price that fits your budget. Then, there’s the actual budgeting, where you need to allocate funds for the eventual home loan! Don’t forget to look for a local mortgage broker to ensure this experience is as hassle-free as possible.
Where does one begin? First things first: financial stability is a must. You need to manage your finances better for that dream home. Here are three ways to achieve it.
Fix Your Budget
In simple terms, a budget is a plan that shows where your money goes at a certain period: a month, a week, or even a day. While it sounds serious and daunting, there are different approaches to creating a successful budget strategy.
One way is to open different bank accounts (within the same bank or various others) that cater to specific expenditures. These multiple accounts help you track where to place your money and tell you where those amounts should go. Here’s a simple, doable format you can follow:
- Groceries Fund
- Utilities Fund
- Emergency Fund
- Generosity Fund
- Investment fund
- Savings Fund
- Entertainment Fund
These accounts can be set up in person or virtually if your bank has online processes. Speaking of online processes, if you’re new to budgeting and don’t want to be overwhelmed, the MoneySmart Budget planner is an easy way to start. Simply click on the link, list your expenditures, and set aside a projected amount per expenditure so you have a better idea of where your money is going. From there, you can adjust your expenses based on your financial goals!
Avoid or Pay Down Loans
Larger purchases such as household goods, automobiles, and the like require loans as most people do not have the financial capabilities to pay them off in one transaction. However, since your goal is that of saving up for a home loan, it might be best to budget which loan to prioritise.
For example, if you can save up an appliance instead of loaned, bite the bullet and purchase the appliance without a loan. Or if it can’t be avoided, get an item with a buy now, pay later scheme. Remember to always go back to your budget, as it will bring you back on the financial track!
Manage Your Credit Cards
Since their invention in 1950, credit cards have become popular for small and large purchases due to their convenience. 142 out of the world’s 195 countries have citizens who own one credit card. In Australia alone, research has shown around 3 billion credit card purchases across the continent!
However, what credit card users have a hard time grasping is the cost of credit cards’ convenience. While its ease and minimum payment schemes are enticing, their compounding interest rates can become a financial sinkhole where most of your budget goes.
To avoid this, pay smaller purchases with cash instead. If a large expense cannot be avoided, calculate the interest amount and if your budget can handle it or not. Remember, your goal is to have enough money for a home loan.
If, however, you are still struggling financially after budgeting, paying down or avoiding loans, and so on, it is time to seek assistance from professionals. You can consult your local bank and seek their options, speak to a financial counsellor.
If you and your family are truly seeking opportunities to finance your new home, you’ll need a local mortgage broker from Melbourne who specialises in restructuring your finances so you can achieve that goal. Set an appointment with us today so we can help you acquire your dream home!