Recently, my lodger asked me about how to save money on living expenses. She and her partner have just purchased a property and will be moving in later in the year. It got me thinking. What is good money advice for someone buying their first home?
I reeled some obvious money saving tips off the top of my head, then went to Instagram to ask how other people would answer this question. It seemed sensible to share the advice from some fellow frugal folk, so here it is!
Disclaimer: I am not a financial adviser, and many of these tips are to help manage your budget rather than take out a mortgage. It makes sense to get proper advice from a qualified adviser before you make what is, in all probability, the biggest purchase of your life.
Fortunately, Miss Frugal Lodger’s partner is in the military, so was able to access the government’s Forces Help to Buy scheme. They have already bought their property, even though they aren’t quite ready to move into it, and decided to buy up north rather than we are in Essex. You get a lot more house for your money!
So, they were looking for ways to reduce their every day costs rather than to help them save a deposit. Here’s what I told them.
Buy second hand
Buy as much of your furniture as possible second hand. Getting everything new from the start will bust your budget.
When I purchased my first home in the late 1980’s, I was given lots of furniture and other bits and pieces by family. I am still using some of them!
Nowadays, charity shops such as the British Heart Foundation and Emmaus have dedicated furniture outlets, which makes life easy. You can also pick items up for free by joining organisations such as Freegle and Freecycle.
Gumtree, eBay and Schpock are also useful marketplaces for finding second hand bargains to help furnish a home.
On Instagram, @beatnikbaby76 said, ‘Tell your friends you’re looking for furniture. I got most of what I own from friends who wanted rid of things!’ @karen2612 says, ‘Live simply and upcycle. New is not always best.’
Keep your grocery bill low
Groceries are an easy place to save money. Mrs Frugal Lodger is a sucker for a takeaway. I think she has the Deliveroo man on her Christmas card list! So, for her, this is an area where she can save a lot.
I have told them to start meal planning and making a shopping list. Not to go shopping when they are hungry and only buy what they need so they don’t waste food they have paid for. And to stop eating takeaways and start cooking!
This doesn’t even have to mean cooking from scratch, as a jar of sauce poured over some mince or chicken takes very little time or effort and is cheaper than a take out. Even a monthly subscription to a service such as Simply Cook* will be more cost effective. They do an awesome range of curries!
Having said that, Mr Frugal Soldier can and does cook, so hopefully he will encourage her in the right direction with this.
@thewickedkitti takes a similar stance to me and advises, ‘Start cooking from scratch and meal plan. Take a packed lunch for work. It’s crazy how much you can save on food. Change supermarket if you shop at an expensive one – don’t be a snob.’
@ryanderryfinance said, ‘Shop at Aldi and Lidl. They’re the same products as name brands but a lot cheaper.’ I am inclined to agree!
How many clothes can one person wear?
Although Miss Frugal Lodger is a charity shop fan like me and often buys pre-loved, she still buys too many clothes. She quite literally has drawers and cupboards with clothing falling out of them. Many others are new with tags and never see the light of day.
So, an obvious piece of advice to her was, ‘Don’t buy so many clothes that you need a whole room to store them in’! Worried about this one, as the new house has four bedrooms….
It’s a good idea to have a wardrobe declutter before moving home. It’s pointless to pay a removal company to hike boxes of unworn clothing to another part of the country. Be ruthless and make some extra money selling your unwanted stuff on eBay.
Try to live debt free
Don’t try to keep up with the Joneses. The Joneses are probably amassing eye watering credit card debt. As Dave Ramsey says, “We buy things we don’t need with money we don’t have to impress people we don’t like.” How does that make any sense?
Debt causes more unhappiness and anxiety than the fleeting pleasure of buying stuff. Unless your purchase is for something essential for the home – like an oven or a fridge (and even these can be bought cheaply second hand) – don’t buy stuff on credit.
If you can possibly save up, then do. By the time you have done so, you might have decided you don’t really need that particular item after all!
The one book I will recommend to them as a plan for debt-free living is Dave Ramsey’s The Total Money Makeover: A Proven Plan for Financial Fitness*. You don’t already have to be in debt to benefit from this one and reading it might mean that you never are.
Save an emergency fund
A key piece of money advice for someone buying their first home is to have at least £1000 in savings for emergencies. An emergency fund will help you avoid debt and stress if the boiler breaks down, you crunch the car or have any other unexpected expenses. This is explained in more depth in this post.
Dave Ramsey advises: ‘Save 3-6 months expenses in a rainy day fund. Know why? Cause it is going to rain, and you aren’t the exception.’
On Instagram, people agreed. @houseoflittlejo said, ‘Put any unexpected money into an emergency savings fund, no matter how small the amount.’
Make a budget
‘GET ON A BUDGET AND STICK TO IT!’, says @ryanderryfinance. This is echoed by others, including @sapphire.79, who says, ‘Have a spreadsheet with every single bill, direct debit and other outgoings on. As soon as you get paid put the money to cover all this in a separate pot. Get a Monzo bank account for this. They are amazing for budgeting and the instant notification you get really helps keep track of things.’
@karen2612 suggests tracking your spending: ‘Whenever you spend money, write it down and what you spend it on, so you don’t lose track. It’s accountability as well.’
Pay yourself first
Whenever I ask people what they would tell their younger selves with regard to money, they always say ‘Save, save, save’! Many people suggest that you pay yourself first, paying all of your bills, putting money aside for savings and then living off the remaining money, rather than trying to save anything left at the end of the month.
@budget.home.decoration says, ‘Pay yourself before you pay anything else. The budget needs to be around that saving, so make it the first thing to be taken from your account. Then it was like it was never there.’
@sara_macs_teeny_tiny_terrace agrees. ‘Pay yourself first. Meaning on pay day, pay into your savings….and then what is left you live on. Most people do it the other way round. And fail.’
Live in your house before making any major changes
@pemlife suggests you hold back before making any big changes to your property once you are in it. ‘Live in it for a while before you decorate, then you will learn what parts are your priorities, what parts annoy you, what you would prefer to change. We got a new kitchen, then a year later realised we would have been better knocking a wall down to make a kitchen/diner. But as we had the new kitchen we could never justify ripping it out again to do it!’
I would also say to learn some basic DIY skills. You can save a lot of money doing your own decorating, for example.
Stop impulse purchasing
One of the tricks to sticking to your budget is to control your spending. But how do you stop impulse spending?
@ahopefulhomebyjenna, who is saving for a mortgage, says, ‘…one of the things I have learned is to delay gratification. Whenever I want something I try to say to myself: would I be able to wait until the next pay cheque?…then after a while if I still really want it and it fits the budget, I go for it. Beauty is that I sometimes realise that I don’t want it THAT badly…’
@ecologico-uk says, ‘The best advice I was given by my gran was “Use it up, wear it out, make do and do without”, never impulse purchase anything, always wait at least a week and chances are you don’t need it/want it anymore. Always look for a pre-loved version first. Almost 33 and debt free so her advice paid off I think!’
This echoes what I wrote in my post Old-fashioned frugality: saving money like your grandma. Before the times of easy credit, when debt was shameful and frugality was virtuous, they had a different view on finance. They had to!
Use cashback sites
When you do make purchases – including for utilities – always check cash back sites such as Top Cashback* and Quidco* first. I generally make a couple of hundred pounds back a year at least, especially at Christmas.
Don’t forget to use them for small purchases either, as these add up. As you can see, I have bought a lot of cards from Moonpig and other places recently and always get cash back on those.
Once you sign up, make sure you recommend the sites to your friends for extra cashback.
Save on TV viewing
TV packages can be eye-wateringly expensive. They reel you in with a great deal for six months, then the bills rocket.
I would suggest getting a Freeview box and subscribing to Netflix rather getting hooked into an expensive TV package. If you don’t want the BBC, you don’t need to pay a TV licence either (although I am a big supporter of the BBC myself and happy to pay less than £13 a month for this service).
Shop around for utilities
Shop around for all your utilities and insurances. Check out the deals on moneysavingexpert.com and comparison sites to make sure you are getting a really good deal.
Again, do check the cashback sites mentioned previously before signing up, as you can get very generous money back on utilities. Make sure it is a good deal overall though.
Don’t allow them to auto-renew either, or they can creep up quite a lot without you being aware. If you want to stay with the same provider, but don’t like the quote they give you, get on the phone and haggle them down.
@karen2612 advises, ‘Shop around…get a good deal. Often you get a gift card for joining as well.
Over pay your mortgage
Paying extra on your monthly payments whenever possible, even if it’s just a small amount, can save you thousands in interest and allow you to be mortgage free much earlier in life.
As someone who no longer has a mortgage, I can tell you how liberating it is.
@sarahgoddard121 says, ‘People think overpaying needs to be huge payments. Even something simple like rounding up your direct debit will make a difference.’
@billyandhishumans goes further. ‘Set yourself a challenge to pay off your mortgage early. My husband and I both took second jobs for a few years, which knocked years off and allowed us to move up the ladder…It was short term pain for long term gain!’
Working towards a mortgage
If you are still saving for a mortgage, there was a lot of advice on saving for a deposit and how long your mortgage should be for.
@seriouslyfrugal suggests you take ‘a 15 year mortgage and buy below what you qualify for’. It’s not wise to over stretch yourself as you risk losing everything in the event of a job loss or illness.
@nichola_lydia says: ‘Try and buy something you can add value to. My husband and I did this in our early 20’s three times and we now have the house of our dreams and two rentals… It all pays off if you invest your money wisely.’ She also advises if you can’t afford a large deposit to buy a flat. ‘Start small and aim high, try to get on the property ladder as soon as you can!’
Francesca @themoneyfox says to ‘save as big a deposit as possible!’
@ryanderryfinance says, ‘I’d always recommend getting a good (FREE) mortgage advisor to sort out your mortgage, insurance and solicitors.’
Make money from your spare room
My final piece of advice would be, if you have a spare room, get a lodger. You can earn up to £7,500 a year tax free under the government’s Rent a Room scheme. You could use the money to pay off your mortgage more quickly or to help you with renovation costs.
If you don’t fancy having somebody at home all the time, how about taking in language students for a few weeks at a time? We have done this a lot over the years and thoroughly enjoyed the experience. See my post on this here for more information on how to do it.
I’m sure there is a lot more money advice for someone buying their first home. What would you say if you were asked this question?
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