Yep, you read that title correctly- my partner and I have taken on the challenge of saving for a house deposit in London, and we are hoping to be able to buy a property by the end of next year.
I’ve ummed and ahhed about going into detail about my savings- particularly sharing the exact numbers behind it all, and more specifically revealing how much I have saved already. This is because I have worried about judgement and the fact that it can be considered tacky or ungainly to speak so openly about the sum of money that is sitting in your savings account.
But then I thought, sod it, if I want to see change- see people talking openly about their finances, their worries and their wins, then I, a money blogger, should be paving the way for such conversations to take place. If I can save enough money for a deposit on a home in London, I’m sure that there are lots of people who can do the same.
My hope is that by sharing these figures, someone might read this and feel that buying a property in London CAN be an attainable goal for millennials- despite many, many, articles online telling us that it can’t be.
So here goes, these are my savings figures:
I currently have £20k in savings.
We estimate that we will need around £48-50k (that’s for the deposit and other fees) to buy our first property in London.
My goal is for me to save up a further £15k by the end of next year.
To give you a completely clear picture of the situation, we are one of many millennial couples who will be getting help from parents to buy our first home. Only, it’s not the Bank of my Mum and Dad, but my partner’s. His parents have been contributing to a Help to Buy ISA for the last few years, and next year it will reach £12k and will then be topped up with £3k from the government, giving us the final £15k we will need to reach our financial goal.
I am aware this puts us in a very privileged position, and if my partner’s parents were not helping us with money towards the deposit, I would be facing a much longer road to save up a deposit solo.
So there you have it- my saving, budgeting and thrifty deeds are all in the hope of reaching my final saving goal of £35k.
You now might be wondering if I am some kind of suit who is earning a huge £100k salary and working in Canary Wharf, but the truth is, I wear trainers and jeans to work, and I currently earn an average London salary.
I’m going to talk you through the ways in which I have saved this money over the last four years- it takes time, patience and a whole lot of determination, but it is possible to save for a house deposit whilst renting in London by doing the following…
Commit to a savings amount each month
Whilst I will keep my salary a secret for the time being, it is worth noting that it is only in the last 6 months that I have earnt an average London salary. Before that, I was earning below the average. I started my first job in London on a £23k salary, BUT still found a way of saving some of my money each month.
How much of your salary you decide to put into your savings account will completely depend on your bills, your lifestyle and how much you are willing to ‘give up’ in order to reach your financial goal. We all have different circumstances so you need to find an achievable figure that works for you.
I currently save 42% of my salary each month. Figuring out your ideal monthly savings figure can take some time- you need to first work out exactly what your rent and bills are, and what your average spending is like each month. Setting a budget can really help you to plan where you want your money to go and will reveal areas of expenditure that you might want to cut down on to free up more money for saving for a house deposit.
I know that saving 42% of my salary sounds like a lot, and it is a lot. But it’s also important to note that I do allow for some flexibility on this- if I want to spend money on a holiday, for example, I will decrease the amount that I save into my ‘house deposit fund’ and spend it on a holiday that month instead. It’s also worth noting that I love a side hustle, and this brings me extra income every month, however big or small the amount- but more on that later.
I have made some sacrifices to get to a 42% savings rate- I love clothes and fashion, but for the last few years I have seriously cut back on spending in this area. To me, my money looks better in my savings account than in my wardrobe at the moment. It’s working out what you can sacrifice, and what you can’t. I couldn’t sacrifice travelling or spending money on flights to see my family, and my budget reflects this.
Open a Help to Buy or Lifetime ISA
I mentioned earlier that my partner’s parents have a Help to Buy ISA set up for him, which they have actually recently changed to a Lifetime ISA. This ISA will mean that we receive £3k on the £12k savings from the government as we are first time buyers.
I also have a Lifetime ISA, where you can deposit up to £4k a year, and the government will top it up by £1k. So essentially, for every £4 you put into a Lifetime ISA, the government will give you £1. I opened my Lifetime ISA last February in a last minute bid to get that government bonus on my £4k before the end of the financial year. You need to send in several official documents as proof of address- I was very short for time and didn’t have much in the way of official documents. I was so keen to get that bonus that I sent in my cervical smear results as my proof of address, and it worked! The £1k was worth the funny look I got from the man signing my documents at the post office.
Opening a Help to Buy ISA or Lifetime ISA is SO worth it, as a couple it means that £6k of our saving pot will be from the government- I like to think of it as free money. If you are thinking of buying with a partner, and you are both first time buyers, you CAN both open separate Help to Buy/Lifetime ISAs and benefit from them both. Of my current savings of £20k, £2k of that is just free money from the government- it really is a no brainer to open an account if you are saving for a house deposit.
The ever evolving side hustle- I’ve been side hustling forever, even back when my best friend and I were 13 and we used to do car boot sales together, selling homemade bracelets and phone charms (anyone else remember those?!).
I do understand why some people don’t love the side hustle- there is no denying that it is a shame that we have to resort to second jobs, working from home jobs and all sorts to meet our financial goals (and in some cases, to make ends meet). BUT for me, the reason I side hustle is to meet my financial goals faster, and I also love the freedom and opportunity that side hustles can bring.
Side hustling doesn’t have to just be survey sites and trying to sell your old clothes on eBay- that’s not to say that either of those are not viable side hustles- they can be valuable! But if you think outside the box you can turn a hobby or passion into a side hustle. I have a guide to making extra money in London which you might find useful if you are new to the side hustle game.
I asked on Instagram what people’s most unusual side hustles were, and they varied from writing erotic fiction for kindles, to DJing, to being a professional organiser to phone sex work. There is a side hustle for everyone, it’s just a case of finding it- everything helps when you are saving for a house deposit.
My friend recently set up a chocolate side business which is already going down a storm in our hometown- she’s super creative so this works wonderfully for her as she loves designing and making the chocolates.
Personally, I have tried my fair share of side hustles, from matched betting, to freelance writing, to surveys, to eBay, Etsy and of course blogging! All of these side hustles have helped me to save money over the years, as I have usually used the income to part-fund holidays, Christmas and additional expenses that crop up throughout the year.
You might be interested in reading: how to sell on Depop with success
Saving for a house deposit: onwards and upwards
It takes a lot of time to save up large amounts of money- saving £20k has taken me 4 years. But with patience and consistency, you will soon begin to see the results showing in your account. Whatever stage of the journey you are at, keep going and results will come!
If you are on a similar journey, or you are thinking about starting one and you have some questions, just drop me a DM on Instagram @thriftylondoner or feel free to email me at firstname.lastname@example.org.