New house, new budget: how I managed my money after I moved into my first home

So, you’re putting in the hard yards to save for your first house. Once you’ve got it, you’ll be able to get flexy with your financials, right? Not soooo fast. A new house can mean a new lifestyle, and it might call for a new money mindset, too. Things can change, but how much things will change is a little unknown. One thing thats almost certain: you’ll be moving from saving for one big thing (your home deposit) to regularly paying for your home loan. We interviewed a first home buyer who has been there and done that. Here, Sophie tells us how her life changed when she moved in and how, in small but important ways, her budget changed with it to keep her doing what she loves.

Hi, Sophie! Tell us a bit about your first home.

We bought a two-bedroom apartment. It’s north facing and drenched in sunlight, and it has a beautiful wraparound balcony. For me, my number one priority was for it to be north facing, for the natural light. For my husband, Tim, he wanted a decent balcony. Lucky for us, we were both able to get the things we wanted.

Describe your budget and lifestyle while you were saving for your first home.

I was really fortunate to go on this journey with Tim. It was great to have someone else to bounce ideas off. While we were saving our deposit, we had automatic monthly transfers going directly into our savings account from the account our salaries went into. We also trialled variations of the amounts in our budget to find what that sweet spot was. So, we would start at a particular number that we thought was comfortable to put away, but then we’d experiment a little. It was always surprising to realise we could save more.

From a lifestyle point of view, we made a small sacrifice to make it happen. We moved in with Mum and Dad to try and maximise savings for a short amount of time. It was definitely a lifestyle change, but it felt worth it. The pros outweighed the cons. When you’re a teenager, you get asked the question, “Are you going to be home for dinner?” And it’s annoying. But as a 20-something-year-old, you’re like, “Yeah, I’ll be home. I would love for you to make me dinner. Great!”

And how about now, now that you’ve shipped off your deposit and have a home loan?

We have continued the automated monthly transfers to our savings account, but we’re also using an offset account to pay less interest. So, we’re making sure we’re not only thinking about the now, but we’re also thinking about the future. We remain committed to savings. Once it goes in, it doesn’t come out.

We’ve found it surprising that we didn’t really need to sacrifice our social life, the thing that is most important to us, to make ends meet. A lot of people might think, “Once I get that home loan, I’m really going to have to cut back.” What we realised is that once you’re in the rhythm of your home loan, you don’t need to. You simply have to work out what’s important for you and adjust a little. I thought I’d be sacrificing more.

In what ways did your money mindset change through the home-buying journey? Do you think differently now?

I worked out you can always make it work. You might need to stretch at times, but as long as you strike a balance between savings and spending, you’re all good. And ultimately, you’ve got a good debt, as far as debts go. There’s this idea that when you’ve got a home loan, it equals debt for the next 30 years of your life, but ultimately, hey, it’s good debt. A home is something to your name that you should be super-duper proud of and that will hopefully grow in value. In the end, it was great learning that it’s a bit of a juggling game, and you can always make it work.

Can you tell us about your budgeting nitty-gritty? What were your budgeting techniques like before you bought your home? And how about now?

The nitty-gritty has stayed basically the same. To determine our budget while we were saving for our deposit, we first wrote down our combined salary. From there we looked at fixed expenses, monthly things like health insurance, car insurance, phone bills. Then we added our variable expenses, like entertainment and dining out. That showed us what was left over to go into our savings. Based on that number, we then made some changes to our variable expenses to reach our savings goal faster, if we could. It helped us set expectations. We said, “All right, if we save X amount per month, that will take us X months to get to our goal. But if we save Y amount, we might be able to hit that in 18 months.” It gave us something quite tangible to aim for. It’s a similar story now. Where once we may have saved towards a big holiday, now it goes to a home loan repayment instead. And that’s great, because that’s where we are at in life. We still save a little for holidays, but they’re not quite as extravagant as they used to be.

Have you been able to keep doing what you love, now that you’re in your new home? And what are you two looking to do next?

We have, but it’s been almost like subbing out one thing for another, at times. Once we’d purchased, we started to ask ourselves, “What does an ideal wedding day look like?” From there, we worked out that we’ve got a specific period of time to pay for all of these different things. So we needed to look at how we’re going to make that work, and how do we make that fit with our home loan repayments as well. It came back to tinkering with those variable expenses. It was really about taking a little bit from here and there, substituting versus completely removing certain things. So, it may be that I used to buy breakfast five days a week. Now, it’s not that I can’t have it at all, I’m just going to get it two days a week.

As for what’s next, my priorities have shifted to the next goal. We’d really like to get married. We’d really like to have a wedding. And weddings aren’t cheap. We thought, “Okay, well, we’ll do a wedding.” And then we’re like, “Okay, well, we then want to have a holiday.” And then, “Okay, well, longer-term, what would our next property look like?” So, I suppose our financial priorities have changed from focusing on ‘let’s buy before we get married, get that good debt and asset’ to ‘let’s save for the next big life goal’.

Sophie’s top three tips for managing your money after buying your first home

1. After purchasing, before making any other life and money moves, give yourself a few months to settle in to paying your home loan so you get used to these extra repayments.
2. You don’t have to sacrifice your social life to make ends meet. Work out what’s important to you, and look for other areas to cut back on spending.
3. Remember that everyone’s different and everyone has different priorities. Do what works for you.

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