Many young Australians aspire to own a home one day, but what are some practical ways to take that first step towards home ownership?

It is usually a good practice to save at least 20% of the (estimated) purchase price of your home as an initial deposit before taking out a mortgage. Aiming for this threshold will help you avoid Lenders Mortgage Insurance (LMI) which is required if your initial deposit is below 20%.

Once you have a rough idea about how much you will need as your deposit, you can follow a few practical steps to get to where you want to be:

Create a sound savings plan – and stay committed

Before getting started, think about how you plan to achieve your goal in the allotted timeframe (when you plan to purchase your home). Doing this will allow you to understand how much you need to save each month. During this exercise, take into consideration other potential income streams (passive income, bonuses etc.) that are on the horizon as well as existing commitments such as debt repayments – this will allow you to make a more accurate estimation. Once you have a clearly defined savings plan, be disciplined enough to set this money aside as a monthly commitment.

Evaluate your financial situation

You can fast-track the achievement of your savings goal by taking a thorough look at your current financial situation. By doing so, you will understand how much money you can save at present, but more importantly, how much more you could potentially be saving – depending on how fast you want to achieve your goal.

This could include making small sacrifices such as cutting down on your entertainment expenses and holding off on purchasing those items that you really want, but don’t really need. It could also include re-evaluating your outstanding debt to identify areas where you can make early settlements without incurring additional fees – allowing you to divert future interest payments towards achieving your goal.

Look at potential avenues for new income

While cutting down on your spending is a good way to allocate extra money towards your deposit fund, you can also look at ways to generate more money. This could involve picking up a part time job to earn some extra cash –in addition to channelling more into your savings, this may also be a great way to get involved in the things you are passionate about, be it art, writing or teaching, for example.

The proliferation of the internet also means that everyone can now be a seller, and using Gumtree, eBay or Amazon, you can sell those items that you haven’t used in a while to boost your savings. You could also invest some of this money to generate some additional returns.

Hold your contributions in a new account

It is also a good idea to start a new savings account for the money that you are saving. This will allow you to make monthly transfers to this account, keeping this money separate from your other funds and preventing you from accidentally spending it. Saving this money in a high-interest account will also allow you to make some returns on your savings.

Seek professional help

By no means is saving for the deposit of your first home an easy task – it takes commitment and sacrifice; despite being for a worthy cause. Given that the opportunities to save are endless, it is likely that you will have questions around whether you are on the optimal path towards achieving your goal. This is where a financial planner could be of assistance – they will work with you to make adjustments to your savings strategy to help you get to where you want to be faster, allowing you to take that first step towards owning a place to call your own!