HOW TO BEGIN SAVING FOR A DEPOSIT

A NEW generation of would-be homebuyers is emerging in the form of Gen Zs. While the oldest Gen Z is now 26, research shows that this generation places great emphasis on the importance of homeownership.

However, Rhys Dyer, the CEO of ooba Home Loans says the barriers to entry remain a key challenge that needs to be addressed.

South African Gen Zs are greatly impacted by rising interest rates, low levels of affordability and economic volatility, affecting their ability to afford the upfront costs and monthly repayments on a home relative to alternatives.

How do you begin saving for a deposit or for other upfront costs?

Providing some financial literacy, Dyer shares his top tips:

Set a specific savings goal. This will give you a clear objective to work towards and help you remain focused on your savings plan.

Open a separate interest-bearing account for your savings. This way, the money is safely stowed away and cannot be reached unless notice is placed on the account.

Draw up a monthly budget. Determine what you need to spend versus what you can save. Make sure that you move your savings into your fixed account as your salary comes in, in order to avoid dipping into the funds.

Automate your savings. Set up an automatic transfer from your checking account to a separate savings account dedicated to your deposit. By automating your savings, you’ll ensure that a portion of your income is consistently allocated towards your goal.

Track your spend. Diligently track your projected spend against your actual spend. Root out the hidden, impulsive items that creep into your budget, for instance, takeaways on the weekend or lattes on the way to work. In a tough economy, small savings can make a big difference.

Prioritise your debts. Give yourself the best chance to succeed by allocating enough money each month to pay off your debts. Check the interest rates that your debts accumulate each month – this will help you see how much extra you are paying in interest alone.

PICTURE: NATIONAL CANCER INSTITUTE /UNSPLASH