How to save your first home loan deposit

Updated: Dec 20, 2021



We are passionate about educating and helping our clients own their own home sooner and continue their financial journey to wealth creation through property and financial freedom.


We hope you find these strategies and tips helpful and implement them straight away into your own life.



Saving for a house deposit has become increasingly difficult for first home buyers with the average age getting into the market being 36 years of age. This is due to a number of factors such as continued increases in house prices, slow wage growth, and changes in lifestyle factors. The upside is that loans have become progressively cheaper as interest rates are now at record lows. Changes in regulation has made it easier to borrow home loans especially due to Government intervention to stimulate the Australian economy during the Covid-19 pandemic.


One of the many ways to save for a house deposit quickly is to manage your money. Specifically managing surplus money after basic living expenses have been covered. Below is a simple method to show you how to implement a money management system to set yourself up to reach your goal of saving for a house deposit quickly.


The Money Management System


Have you ever felt disappointed, wondering where all your money went? We have all had this feeling at some point which may have sparked your interest in learning about managing your money, or even made you angry enough to question your money habits to do something about it!


We will show you a simple, automatic money management system you can implement right now to better manage your money. Why? Because you need to know where your money is being spent, because you need to regularly put money aside to save for your house deposit to buy your first home, and prove to the banks you can manage your money well come time to take out a home loan. Knowing where your money is being spent helps you save for that house deposit, saving for emergencies, meeting growing family needs and paying off your home loan sooner, saving you thousands in interest over the life of the loan.


The money management system comprises of three main bank accounts, and allocates income into three separate "buckets" or bank accounts as percentages by calculating 70% of income for bucket one, 10% of income in bucket two, and 20% of income in bucket three, as a starting guide.


Bucket 1: Income is received from employment into this account as well as expenses paid from this account. This account is a standard transactional account with a linked bank card. This account should also have a balance or “float” of no more than $1,000 at any given time.


Bucket 2: This account can be a savings account to build up cash for emergencies such as car repairs, and should have a balance of no more than $2,000 at any given time.


Bucket 3: This account is the magic bucket that receives all the remaining income to be put away into savings for your house deposit. This account is usually a high interest savings account and these funds are not to be spent for any purpose other than saving for that house deposit.


Diagram 1: Bucket System



The 70/10/20 Rule


Expand your existing banking to include the following three bank accounts to use as "buckets" if not already where money is poured in from bucket one to bucket two and bucket three.


Bucket 1: Income & expenses account

Bucket 2: Emergency savings account

Bucket 3: High savings account


Use automatic transfer options in online banking to set up income amounts of 10% and 20% to be transferred to buckets two and three, or manually transfer funds as soon as each pay hits your bank account. Once bucket two has a minimum balance of $2,000, direct additional funds into bucket three.


Additional buckets or accounts can be created and percentages can be changed and should be reviewed regularly based on income and expenses, but the main idea is to pay yourself first, meaning transfer the amount of money allocated for bucket three, saving for your house deposit.



Diagram 2: Flow of Money


The money management system discussed above is a simple yet effective system to help you save for a house deposit faster, and help prepare you to manage you money well.


At Wealth Psychology, we specialise in financial planning, home loans and tax accounting. We can show you the path to buying your first home sooner.
We help our clients take the next step in buying their first investment property, as well as formulate a plan to continue building property portfolios. As credit specialists, we have access to multiple lending options to fit your personal needs.
Contact us today via our website contact page or Facebook page to find out how we can help you.
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