4 Simple Ways to Save a Deposit

Expert Advice: by Sam Saggers

It’s time to face reality – there is no magical way to save money. It takes a lot of self-control and determination and, yes, you’re going to have to make some changes otherwise you’re going to end up right where you are. If you want an investment property, and if you’re reading this I’m guessing yes, then here are four simple tips to save a deposit.


No, not that kind of sacrifice! I’m referring to those little things that stand in the way of saving money. Maybe it’s your morning latte or perhaps your daily lunches outside the office. Put the money you ordinarily spend on these activities into an account where they can earn interest and you’ll feel smarter “and richer” almost immediately!

Candidates for the slaughter...er reduction!

  • Consumer debt - otherwise known as “the bag of designer clothes tucked away at the bottom of the closet that you’re hoping your partner doesn’t ask you about.”

    Hate to say it, but someone must...those clothes are standing between you and your dream lifestyle. Of course everyone must buy clothes, and if you want to wear Louis Vuitton that’s your business, but in the end, it all comes down to debt. Can’t write it off? Bad debt...naughty debt...toss it, as soon as possible and you’ll be surprised how quickly you can reach your goals.
  • Unnecessary expenses. Think short-term sacrifice, long-term payoff. Items in this category include “extras” such as pay TV, an excessively large data plan for your smartphone - even a gym membership. By the way - once you’ve lived without these modern conveniences you may even realise you don’t need them after all.

    Keep your mindset straight. Instead of thinking about cutting back as deprivation, think about the lifestyle you’ll soon get to enjoy. Use visualisation ... especially if you want out of the “rat race”. Think of the expressions on everyone’s face - especially the boss - when you announce your early retirement!


2.Pay the bank of “me” first

It may feel a bit odd paying yourself first, before anybody else, but this is the surest way that any extra dollars and cents don’t end up being frittered away. Establish a set amount (10% is a good starting point) according to your budget (you do budget, don’t you?) and faithfully put it to work collecting interest.  You don’t budget? We’ll talk later...stick around!

Do you tend to be something of a spendthrift or do you pinch the last bit of life out of every single dollar? I don’t really need to know this, but you do. If you tend to play loose and fast with your coins, make it as difficult as possible to get to your money. This way you won’t be tempted to spend your savings on a new pair of shoes or whatever your passion is.

If you know that you’ve a tendency to be a spendthrift, do yourself a favour and make it harder to get to your money.  Instead of tucking it away in your couch or mattress, set up an automatic draft with your bank and have them “tuck it away” in an account for you - preferably at another institution where you don’t do business on a regular basis.


3.Make More Money

This was probably the first thing you thought of when I mentioned saving for a deposit, am I right? There are lots of ways to make extra money:

  • Moonlighting
  • Leaving your job for another higher paying one

Or if you’re self employed:

  • Taking on a partner to help you grow your business
  • Raising your rates
  • Cutting expenses
  • Finding more clients

The choice is yours. Smaller, less time consuming ways to make more money:

  • Sell unused and/or unwanted items on eBay
  • Work freelance


4.As a first last resort

Depending upon your situation and/or your mindset, one strategy that is becoming more common is house sharing to reduce expenses. Many individuals move back in with their parents or even with friends to cut costs and save for a deposit. On second thought...maybe this should have been listed under sacrifice.

Sam Saggers is CEO of Positive Real Estate and Head of the buyers agency which annually negotiates $250 million-plus in property. Sam's advice is sought-after by thousands of investors including many on BRW’s Rich 200 list. Additionally Sam is a published author and has completed over 2000 property deals in the past 15 years plus helped mentor over 2200 Australian investors to real estate success!
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Disclaimer: while due care is taken, the viewpoints expressed by contributors do not necessarily reflect the opinions of Your Investment Property.

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