Saving for a new pad? Need some help? Here's a helping hand.

By Iona Bain
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150,000 people managed to buy their first property in the first half of the 2016. Make 2017 yours.

In fact, 154,200 people managed to buy their first property in the first half of 2016 – that's 10 per cent more than the same period last year. While some of those buyers may be financially well-off, many are simply hard workers and diligent savers – and they know a few tricks of the trade to help them on their way. Read below for our guide to nailing your first home.

Financial fitness

Buying property is arguably the most important financial decision you can make. But it could also turn out to be your best.

If you’ve chosen this path, it’s time for a financial fitness regime that puts saving first.

Budgeting

First of all, run the rule over your income and your current spending. Are you spending excessively? Saving too little? If you haven’t done a budget before, now is the time.

You need a jotting notebook you can carry round with you and record everything you spend in a month, or something smart on your phone.  

Be honest. Don’t under-count or leave out those little extras – trips to the coffee shop or buying drinks for randomers. Cutting those out could go a long way. You may use a combination of contactless, debit and credit cards, and cash, so you can’t rely on a full record on your bank statements.

Go digital

You can get help from a ‘spending diary’ app such as Toshl, and online platforms such as Money Dashboard, Ontrees, or Wally, all of them free.  These are ‘read-only’ applications with colourful graphics that allow you to view all your current, savings and card accounts in one place, but not to move money around.

The aim is to target some flabby spending, slim it down, and get fit for saving.

Better deals

Rank your outgoings in order of necessity:  your rent would come first, followed by utilities and council tax.  Bottom of the pile is your discretionary spending - eating out, clothes, impulse buys, online temptations.

In between there might be a direct debit or two that can be killed, or possibly even one that you do not remember signing up for. You might also want to review your energy bill, to see if switching could save you money. All you need is a note of your current usage or spend. And how about your broadband deal or your mobile contract?  Time spent working out exactly what you are getting, what you actually need, and how much you should be paying for it, will nearly always pay a dividend in lower bills.

Comparethemarket.com reckons that millennials who switch energy, home and car insurance every year stand to gain more than £500.

Little luxuries

Don't attempt to make ambitious cutbacks all at once. Start with little luxuries, such as that regular cup of coffee. Fidelity Investments suggests that reluctant savers try an Isa Cappuccino Plan. It reckons that £2.50 spent on a daily caffeine fix could be diverted into a stocks and shares Isa, giving you £50 a month (£600 a year) to play with. Not only would that attract a £150 bonus, your total returns after ten years could top £7,000 if your investments grew at five per cent a year.  

You could also make your own lunches each day and take advantage of coupons to save on food expenses.

Cash control

If you struggle with overspending (especially at the shops or on nights out) withdraw cash from an ATM beforehand, leave your card at home and stick to your allotted amount. If you’re prone to an online splurge, install an app or piece of software that blocks access to certain sites. Your future self will thank you!

If you have any loan or credit card debt, pay that down first before you start to save. Balance-transfer credit cards now give you three years or more to do that, with transfer fees ever more competitive, and there are cards with interest-free deals and no upfront fees.

Your account

Have a look at your bank account.  You should be aiming for two things: not to pay an account fee, and not to pay a daily charge for going into the red.  It could be worth your while switching your account, and some banks will offer you £100 or more to switch.  That’s worth looking at, but if you are likely to need an overdraft, choose a bank that charges an interest rate rather than a daily fee. don’t pay for it by the day. Some accounts also have an interest-free buffer to stop you being stung for minor lapses.

The current account switching service now guarantees a transfer within seven days, so  it's faster and easier than ever to move your account to one that fits your needs.

The savings habit

Try and turn your financial fitness makeover into a savings habit.  Set up a regular standing order from your current account into a dedicated savings account, so you don’t notice the money going out.

You could time it for the day after you are paid, and it will quickly become natural to you.  If you are worried about having enough in reserve for unexpected bills, or holidays,  keep a separate account as an emergency fund.   

Your dedicated savings account could be your homebuying nest egg. If you fancy yourself a future homeowner, a Lifetime ISA may help you get on the property ladder, to know more click this.

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