FINDING a savings method that suits you can make tucking away cash easier, as first-time buyer Rachel Maughan found out.
Trainee further education teacher Rachel, 30, saved up the cash she needed for her £115,000 first home by using the envelope money challenge.
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To get started, Rachel bought a pack of envelopes and marked each with a number from one to 100.
She then placed all of the envelopes into a box and picked out four every week and saved the amount of cash it specifies.
For example, if the envelope is marked with ten, she would then save £10 in her bank account.
Other people choose to put physical cash into the envelope itself.
If you stick to this method, you could save around £5,000 in just a year.
Rachel stuck to the challenge for around ten months and managed to save £3,000 thanks to the money saving trick.
While this trick worked for Rachel, it might not work for everyone as it can require spare cash to put away.
But there’s money saving challenges suited to all budgets.
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Some ask you to put just pennies away, like the 1p savings challenge which could help you to squirrel away up to £670 a year.
Plus there’s the 52 week challenge, which works by getting participants to put aside £1 for the first week, £2 for the second, £3 for third and so fourth, until the end of the year.
Different schemes will work best for different people depending on their circumstances – the idea is to make saving money more manageable.
While it might seem easier to stash small amounts in cash, you should think about whether a savings account would be better suited.
This is because you won’t earn any interest on savings stored as cash.
The envelope challenge was just one of the ways Rachel was able to save for the deposit for her first home.
She also took up extra shifts working at a children’s home during the school holidays and at weekends to earn extra cash.
She did this for around one year and saved between £4,000 and £5,000 extra towards the property.
Rachel got the keys to her two-bedroom terraced house in Gateshead in February this year.
We sat down with Rachel to discuss how she went from being a saver to a homeowner for The Sun’s My First Home series.
Tell me about your home
It’s a two bedroom terraced house in Gateshead.
One is a double bedroom and the other is a bit smaller but there is a separate bathroom.
Downstairs is the living room and a fairly large kitchen.
The property also comes with a small patioed front garden.
How did you decide on location?
I knew that I didn’t want to be too far away from my parents, so when I found somewhere ten minutes away, that was perfect.
The area also has good transport links and access to the A1 which will be handy for work.
How much was it?
The house was £115,000 and I put down a 10% deposit of around of just under £12,000.
I took out a mortgage of around £103,000 for 35 years with a five-year fixed rate of 5.49%.
I took out a longer mortgage so that my monthly repayments were more manageable and I currently pay £552 a month.
How did you save for it?
I was living at home with my parents before I decided to move out, so this saved me a lot of money.
I paid around £160 a month in board.
I first started saving seriously in 2020 and I decided that I would like to have my own place the next couple of years.
To help my reach my goal, I took out a separate job at a children’s home to earn some extra cash to put towards my deposit.
At the time I was a teaching assistant but with schools being shut because of the pandemic, and with nothing to do socially, I decided to just work and work.
I took up a job at a local children’s home and worked their during the school holidays and at weekends.
I would work an average of four shifts a month, but this would vary depending on the home’s availability.
Some months I would work more, and sometimes I would work less.
I gave up the job in September 2021.
Overall, this extra worked helped me to put between £4,000 and £5,000 extra into my savings.
I also used the envelope challenge to save £3,000 towards my deposit in ten months.
I bought a pack of envelopes and wrote the numbers one to one hundred on them and used these to help me save money.
I then shuffled them up so the numbers weren’t in order and the idea was to pick out four a week at random.
You then simply put the amount it says into my bank acount – whether it’s big or small.
Some weeks it wouldn’t be possible – particularly if I picked out two large amounts – but I always tried to achieve it.
I found the method worked really well and it was a fun, easy way to save money.
In addition to this, I was also putting around £500 straight into a savings account from my wage.
This was a manageable amount of money for me to tuck away without leaving me stretched.
Before the pandemic, I used to go on one big holiday a year which would cost roughly £1,500.
But because of the pandemic restrictions, I didn’t go on holiday for two years so this extra cash went into my savings.
How did you afford to furnish it?
I knew that I needed to save my deposit to afford the furniture that I wanted.
I have been buying everything in stages, and I still have some stuff to get.
I’m also doing some work done on the house – mostly decorating – so I have been keep up with my previous saving habits to afford this.
Facebook Marketplace has been really useful for finding some good quality, second hand furniture.
For example, I got a TV Unit from Dunelm that would have cost around £100 in the shop for £50.
What advice would you give to other first-time buyers?
Just don’t give up – it’s a long process but just hang on in their.
It felt like a bumpy road to get to owning my own home and it can be a bit daunting.
I’d say just keep going because it’s so worth it in the end.
One family used the snowball method to clear £26,000 worth of debt and buy their first home.
One savvy saver managed to put half of his wages away while still renting to buy his first home.
Do you have a money problem that needs sorting? Get in touch by emailing [email protected]
