How to Save Money While Renting in New Zealand So You Can Buy a House
For many people in New Zealand, renting can feel like a long-term arrangement without an end in sight. But what if renting could be part of your journey toward homeownership? Saving money while renting may seem challenging, especially with rising living costs, but with the right mindset and strategy, you can take concrete steps to build a deposit and eventually buy your own home.
This is our very first house in NZ back 2017! We purchased the land during pre-selling, securing it with just a $5k NZD deposit. In just a few months, the value jumped to $25k. We sold the house within 2 years, walking away with a gain of over $200k!
Here are some practical tips on how to save money while renting, so you can be on your way to owning your dream home:
1. Create a Budget and Stick to It
A budget is your most powerful tool for saving. Track your income and expenses to see where your money is going. List your essential costs (rent, utilities, groceries, transport) and non-essential costs (entertainment, dining out, shopping). Knowing how much you’re spending allows you to find areas where you can cut back and redirect those savings toward your house deposit.
Tip: There are many budgeting apps like PocketSmith or Money Lover that can help you keep track of your finances.
2. Downsize Your Rental
If you’re serious about saving for a house, consider moving to a cheaper rental. While it may be tempting to live in a larger or more modern place, downsizing to a smaller unit or moving further from the city can significantly reduce your monthly rent. Even moving in with family or flatmates for a short period can help you save thousands in a year.
Tip: Consider renting in less expensive suburbs, where you might find more affordable accommodation without sacrificing too much on quality of life.
3. Save Automatically
Setting up an automatic savings plan makes saving easy and consistent. As soon as your salary comes in, have a portion automatically transferred to a separate savings account dedicated to your house deposit. This way, you’ll be less tempted to spend it.
Tip: Open a high-interest savings account and avoid touching the money unless it’s for a serious emergency.
4. Cut Unnecessary Expenses
Look at your current lifestyle and identify areas where you can reduce or eliminate spending. Can you cook more meals at home instead of dining out? Do you need all those streaming services, or can you cut down to just one? Small sacrifices today can add up to big savings in the future.
Tip: Review your utility bills and see if you can switch to cheaper providers or reduce usage to save on power and water.
5. Share Costs with Flatmates
If you have a spare room, consider renting it out to a flatmate. Sharing your living space can greatly reduce the financial burden of rent and bills. Even splitting groceries and internet bills can contribute to your savings goal.
Tip: Be mindful of choosing a flatmate you trust and get everything in writing to avoid misunderstandings.
6. Take Advantage of KiwiSaver
If you’re a first-time homebuyer, your KiwiSaver fund can be a valuable resource. As long as you’ve been a KiwiSaver member for at least three years, you may be able to withdraw most of your funds to use as part of your deposit for a home. Additionally, you might qualify for a First Home Grant, which offers up to $5,000 for an existing home or up to $10,000 for a new build. Update – this has been stopped May 2024 but might come back..
Tip: Regularly review your KiwiSaver contributions and consider increasing your contribution rate if you can afford it.
7. Look for Secondary Income
Adding a second income stream is a great way to boost your savings. Consider part-time work, freelance gigs, or selling items you no longer need. This extra income can go directly toward your house deposit fund without affecting your daily budget.
Tip: Explore side hustles that match your skills, such as tutoring, graphic design, writing, or even offering rideshare services on weekends.
8. Avoid Lifestyle Inflation
As your income increases over time, resist the temptation to upgrade your lifestyle. Many people fall into the trap of spending more when they earn more, but if you can maintain your current lifestyle while earning a higher income, you’ll save even faster.
Tip: When you get a raise, immediately increase your savings contributions rather than your spending.
9. Stay Focused on Your Goal
Saving for a house deposit is a long-term goal, and there will be times when it feels like progress is slow. Keep your eyes on the prize and stay motivated. Surround yourself with supportive friends and family, and remind yourself that every dollar saved is a step closer to owning your own home.
Tip: Visualize your dream home and remind yourself why you’re making short-term sacrifices for long-term gains.
10. Educate Yourself About the Property Market
Knowledge is power. While you’re saving, make sure to research the property market in New Zealand. Learn about the best areas to buy, how much you’ll need for a deposit, and what kind of home you can realistically afford. Understanding the process will help you plan better and give you the confidence to make informed decisions when the time comes.
Tip: Attend free property investment seminars or webinars (like the ones offered by Pinoys in NZ) to stay updated and learn from experts.
Conclusion
Renting doesn’t have to be a dead end. With careful planning and determination, you can save money while renting and work toward buying your own home. The key is to stay disciplined, make smart financial decisions, and take advantage of any resources available to you, such as KiwiSaver and government grants. Remember, every little bit counts, and with the right approach, homeownership in New Zealand is within your reach!
Also your first house does not need to be your dream house. Enter the property ladder and work towards owning your dream house instead.
Join us!
Pinoys in NZ Prosper Faster Summit 2024: Prosper Faster Through Property Investing
Ready to start building passive income and secure your financial future? Join us at the Pinoys in NZ Prosper Faster Summit 2024: Prosper Faster Through Property Investing, a live event focused on empowering Filipinos in New Zealand to unlock the potential of property investments and achieve their financial goals.
Meet Our Expert Speakers!
Rex Yap
A seasoned businessman and property investor, Rex advocates for “Proper Stewardship Through Financial Literacy.” With years of experience conducting successful seminars, Rex will share key strategies to help you prosper faster through smart financial decisions.
Here’s what you’ll learn from Rex during the seminar:
MINDSET Mastery
Uncover what’s holding you back from achieving your dreams. Learn how to rewire your thinking, conquer fears, and unlock your full potential. Rex will guide you through mastering affirmations, achieving a peak state of mind, and understanding the cycle of success.
MASTER the BASICS
Start with a strong financial foundation. Learn how to budget effectively, organize your finances, and use practical tools to gain clarity on your path to financial success.
EXPLORE Investment VEHICLES
Discover different investment options and understand whether diversifying or consolidating your investments will yield better returns. Learn how to unlock the potential of various investment vehicles to grow your wealth.
LEVERAGE the Power of LENDING
Gain insights into the criteria for successful lending. Learn how to calculate usable equity for buying investment properties, understand key investor ratios, and get practical tips on affordability and windows of opportunity for financing your property ventures.
Introducing Ivan Presquito
Ivan Presquito, a leading Property Developer and owner of Elegant Kiwi Homes, will join us to share his success story and expertise in the world of real estate.
With over a decade in the industry and a portfolio of more than 100 completed homes across New Zealand, Ivan will present 6 Golden Strategies for generating passive income through property investing — even without large upfront investments.
Here’s what you’ll learn from Ivan:
New vs. Old Property: The Pros and Cons
Should you invest in a new build or refurbish an older property? Ivan will share his experiences and offer valuable advice to guide your investment decisions.
Renting vs. Airbnb: The Pros and Cons
Learn the key differences between traditional renting and using Airbnb for your property. Armed with this knowledge, you’ll be better equipped to decide which strategy best aligns with your financial goals.
Who Should Attend?
If you’re paying high rent and dreaming of buying your first home, this event will show you actionable steps to make that dream a reality.
If you’re a homeowner with equity and want to start property investing, you’ll discover how to leverage your existing assets to generate extra income.
If you’re already a property investor but not earning at least $30,000 to $50,000 extra income annually, you’ll learn the strategies to boost your earnings and achieve greater success in property investing.
EARLY BIRD TICKETS available until Sunday, 29th September 2024, 11:59 PM!
This is your chance to learn from experts and take actionable steps toward creating passive income through property investing.
Seats are limited, so reserve yours now!
For tickets and more info, click this link and register – https://www.pinzmarketing.com/prosper-faster-summit
Don’t miss out on this incredible opportunity to prosper faster through property investing! Secure your spot today and take control of your financial future.
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P.S. I did not want to let go of this house in 2017 due to emotional attachment but we needed to move to a bigger land (land banking – 22 acres farm). That decision led to subdivision and more equity. Learn more about strategies like this at our property investing seminar on October 12th!