It’s that time of year where everyone is motivated to write their goal plans and wish lists for the New Year. And it’s a good thing, we are in control of shaping the future we really want, however, New Year’s resolutions, large and small, have a bad habit of falling by the wayside pretty quickly. In fact, 92 per cent of people are not able to complete their New Years resolutions, with almost a quarter of them having failed by the end of January. An ineffective goal really comes down to poor planning rather than lack of desire, so turning that around and making those goals stick is just a matter of getting the plan right from the start.
No matter what your current situation is, transforming yourself into the person who eats less sugar, walks the dogs every day or saves money for a home deposit is as easy as being SMART.
If owning your own home is one of your near future goals, (or maybe it’s currently on your wish list) then now is the perfect time to get into action and get some goals and plans in place that will see you packing boxes and moving in no time.
Your 2019 goal to save a deposit to own your own home.
In order for a goal to work you need to get down to the nitty-gritty and know in advance what you’re signing up for. Owning your own home is part of the Australian dream, but you need to know specifically how that dream applies to you.
Why do you want to own your own home?
Write a list of all the reasons for being a homeowner and all the benefits you will receive when you reach your goal. This is on you so forget any reasons that come from other people, this is your money and your purchase so it needs to come from you and you alone.
It’s a big purchase so make sure your list is a long one by really working it over and getting yourself as positive and motivated as possible. Include tangibles, (like all the home features on your wish list) as well as intangibles. Usually it’s those emotional reasons that will get you all-in on making the switch to save; Safety, security, personal identity.
What will you have to give up to get it?
Next, write a list of all the things you will need to sacrifice in order to own your own home.
Let’s be honest, this is going to take some work and expense, not just for the purchase itself but the mortgage repayments for the length of your loan. Most people don’t address the sacrifices they need to make or reconcile these before they start saving. Knowing ahead what it’s going to cost can really help you stick it out because you’ve looked it over carefully, a bit like a contract, before you commit.
Sacrifices might include skipping drinks with friends or even cutting out having drinks at home, waiting for DVD rather than going to the cinema, taking a packed lunch to work instead of going to a café or sticking to instant coffee in the office kitchen rather than your morning trip to the barista. You and your partner might agree to no presents for birthdays and Christmas, no vacations, and definitely no overseas trips.
What are the costs really?
You need to have enough money aside to cover everything for your home purchase, which includes real estate fees, a high-quality conveyancer and paperwork costs. The first homebuyers incentive can really help out if you qualify, however, some costs can’t be skipped so look into it ahead of time and plan these additional costs into your budget
Once you are committed and ready to get started you can put a plan in place with a SMART goal. A goal is really a wish with details, the more details you have the more solid your goal will be and the clearer you are going to get on your outcome.
The acronym for a great goal plan is SMART and it works, as long as you are truly smart about it. So let’s walk through the points you are going to be locking down in your goal to save your deposit for your home.
S is for Specific.
The more specific you get about what you want, when you want it and how you are going to get it, the easier it is to prioritise and get on track. “Saving money” isn’t specific enough, really know what you are saving for and what the end result will be. i.e. “Save for a deposit on a two bedroom unit in the inner city suburbs, close to public transport”.
M is for Measurable.
You need to measure not just your goal but the steps you are taking to get there. That way you know month to month or even week to week if you are on track or if you need to change gears. Once you know what your goal is you can get a measure for milestones as well as the end result.
GOAL: “Save $100,000 towards a home loan by December 2022.”
That means you are aiming to save $480 a week with milestones that are easy to measure:
• $25,000 secured by December 2019
• $50,000 by December 2020
• $75,000 by December 2021.
You can have milestones that are weekly fortnightly, monthly or biannual. If you go over your target week to week look at increasing your goal amount. If you go under more often then not look at your sacrifices, see if you are meeting them or if more needs to be done.
A is for Achievable.
Now that you have your measure you know if you can get there. Breaking your goal down should give you an amount you can reach consistently each week, fortnight or month to reach your goal. Taking a look at these milestones will let you know if you can achieve this amount. If not you might need to look at other options, like a place in the outer suburbs that will be cheaper or getting a second job to reach your savings goal. You need to make sure your goal is neither too easy or too difficult, both extremes will discourage you quickly from staying on track.
R is for Relevant.
Is this the right goal for you? Are you buying what you want where you want it? The final goal needs to be relevant to you, your place in time and your situation. Buying because it’s what your friends are doing, what your family wants or because the market seems ripe can lead to a mess of problems. You may find it hard to save money if you are not connected to your goal, experience buyers remorse or be forced to sell soon after buying if your work or lifestyle calls you someplace else, meaning you risk losing money on your purchase
T is for Timely.
Your goal needs time restrictions or you will be tempted to put it off til tomorrow (every day). Make sure the time frame you pick to complete your goal is achievable.
Now you have everything you need to turn your dreams into reality, all you need to do is follow the directions and be SMART.