Saving for a Home deposit – step-by-step guide

Here’s an example showing how the actionable steps could work over 12 months, assuming a goal of saving $25,000 for a 5% deposit on a $500,000 home.  

The same logic and process can be followed for a bigger deposit.  You’ll either need to save for a longer timeframe or larger monthly amounts. 

We’ll break it down into a plan that incorporates all the steps: 

12-Month Savings Plan for a $25,000 Deposit 

Step 1: Set a Clear Savings Goal 

Deposit Goal: $25,000 

Monthly Savings Target: $25,000 ÷ 12 months = $2,084 per month 

Step 2: Automate Your Savings 

• Savings Account: Open a high-interest savings account with an interest rate of 5.5%. 

• Automate Transfers: Set up a monthly transfer of $2,084 on the day you get paid. 

• Interest Earned: If your account has a 5.5% interest rate, by month 12, you’ll have earned about $709 in interest, slightly reducing the amount you need to save from your own income. 

This is one of the most important steps, make sure you have a separate bank account for your deposit, so you don’t dip into to pay ongoing living expenses. 

Step 3: Track Your Spending & Cut Back 

Let’s assume you’ve reviewed your spending and identified ways to save $400 per month: 

Cutting Costs: 

• Cancel unused subscriptions: $50/month. 

• Reduce dining out and meal prep at home: $200/month. 

• Switch to cheaper utilities and phone plans: $50/month. 

• Adjust grocery shopping to avoid impulse buys: $100/month. 

Monthly Savings from Reductions: $400 

With these reductions, you only need to save $1,684 from your income each month. 

Step 4: Boost Your Income 

You decide to increase your income by taking on extra work: 

Side Gig: Earn an additional $300 per month by freelancing or doing weekend work. 

Total Savings Needed from Main Income After Side Gig: 

$1,684 (after cutting costs) – $300 (extra income) = $1,384 per month from your regular pay. 

Step 5: Make Your Money Work for You 

You qualify for a First Home Owner Grant (FHOG) in your state, which offers a $10,000 grant for first-time buyers of new homes. 

You’ll still need to save your full deposit of $25,000, but the grant will help with other expenses like stamp duty or moving costs when you purchase the home. 

Step 6: Stay Motivated & Accountable 

To keep track of your progress: 

Month 3 Progress Check: 

By month 3, you should have saved about $6,250 with automatic transfers. 

Month 6 Progress Check: 

By month 6, your savings balance should be around $12,650, including interest. 

Celebrate the halfway point with a small, budget-friendly reward like a day trip or a movie night. 

Final Results After 12 Months 

Total Savings: $25,438 (including $709 from interest). 

Deposit Goal Achieved: You have slightly exceeded your $25,000 goal thanks to earned interest. 

By breaking down your goal, automating your savings, cutting costs, increasing your income, and using interest-earning accounts, you’ve saved enough for your home deposit within 12 months! 

If you’d like more strategies to help you buy your own home faster and get a better deal – have a look at the courses available at our website: