5 top tips for new homeowners to stay afloat financially - Finance, Advice
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5 top tips for new homeowners to stay afloat financially

06 Mar 2017

Buying your first home is one of the most exciting times of your life, but there’s no denying the stress factor of such a huge financial commitment. With those monthly payments looming, having any extra cash in the bank might seem like a distant dream, but with a little work and a lot of creativity, it could be easier than you think.

“Try to stay positive and think creatively, and keep your goals clear in your mind. Having control over your finances is much easier if you’re willing to work for it,” says Rawson.

“A lot of new homeowners struggle with the financial side of owning a property,” says Bill Rawson, Chairman of the Rawson Property Group.

“What I find amazing, however, is the creative solutions people find to ease the pressure on their finances.”

While those solutions are as varied as the buyers themselves, Rawson says he has found some to be more effective than others.

Below are a few of his top recommendations:

1. Cut back on small luxuries

Nobody expects you to eat bread and water for the next twenty years, but cutting back on little luxuries can save a surprisingly large amount of money.

“People are always surprised by how much they can save by doing simple, everyday things like taking a packed lunch to work,” says Rawson.

“That deli sandwich may be tasty, and save you a few minutes of time, but it costs as much as R1 000 a month. Forgoing your morning cappuccino and afternoon snack could save you another R1 000, while cooking dinner at home instead of eating out will keep another few thousand in the bank.”

2. Budget your social life

It’s not just edible luxuries that need reassessment - socialising can also be very expensive these days, particularly if you have costly hobbies or like to party at the trendiest spots.

“Spending quality time with family and friends is extremely important, but it shouldn’t have to cost an arm and a leg. There are countless activities in every city that you can take part in for free,” says Rawson.

“Try hiking, picnicking, visiting local parks or beaches, or join in a community or cultural event. Having a braai at home can also be just as much fun as heading out to a bar, and the food and drinks will be half the price - and probably twice as tasty.”

3. Get rid of unnecessary expenses

“The biggest thing for new homeowners to remember is that even if money is tight at times, your property is a valuable asset that is worth sacrificing for, every now and then,” says Rawson.

By the time we reach home-buying age, most of us will have signed up for our fair share of contracts and accounts. Think gym memberships, cell phone plans, store accounts and various clubs. While these may have seemed like a great idea at the time, very few of us continue using them to their full potential in the long term, and end up spending far more than we’re getting back at the end of the day.

“Take a careful look over all your monthly debit orders and expenses, and think about which items are necessities, and which are costing more than they’re worth. Cancel that unused gym membership, downgrade that expensive cell phone contract, and close the store account that encourages impulse spending,” says Rawson.

“You’d be amazed at how much money you spend each month out of habit rather than necessity - all that cash could be put to far better use in your bond.”

4. Turn your hobbies into income

If you’re already saving everything you can, it’s time to consider earning a little something extra, and the easiest - and most fun - way to do this is to monetise an activity you already love.

“Home industries and after-hours freelancing are becoming more and more common, and both can offer very viable sources of additional income,” says Rawson.

“I’ve seen many instances of people turning their part-time passions into extra cash, from home knitters and bakers to bloggers, photographers, DJs and event planners, and even curators of boutique online shops.”

5. Use your property to earn cash

Another way to increase your income is to leverage your brand new property. This can be done by renting out space on platforms like Airbnb, or taking in a permanent lodger or housemate.

“Airbnb has made it so much easier for homeowners to make money from extra space, whether they have a spare room, a flatlet, or even just a really comfy couch,” says Rawson.

Of course short-term letting can be unpredictable, so he says you may prefer a more permanent arrangement. Either way, it is possible to use your property to generate income that can go towards its upkeep and expenses.

“The biggest thing for new homeowners to remember is that even if money is tight at times, your property is a valuable asset that is worth sacrificing for, every now and then,” says Rawson.

“Try to stay positive and think creatively, and keep your goals clear in your mind. Having control over your finances is much easier if you’re willing to work for it.”

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