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Buying your first home? Here’s how to ensure your finances remain steady

By Mo Zeitouneh

As a first home buyer, understanding where you stand financially is paramount. Picture: Getty

From budgeting to sorting out your super, it’s worth getting on top of your money to ease any home-loan pressures and struggles.

Buying your first home is a huge (and very exciting) milestone – but before you can rejoice in your newfound status as a homeowner, it’s important to get your finances in order for both the short and long-term.

Here are six tips for managing your money as a first-time homebuyer, with expert super insights from Spirit Super’s Tim Lambert.

1.   Establish a budget

You may have already established a budget to help save for your deposit, but if not, now’s a good time to make one because a budget will give you an accurate idea of money coming in versus money going out.

First, work out how much money you receive each week or month. This’ll likely be from your salary, but you may also make money from a side hustle or share dividends.

Next, create a list of your expenses: home loan repayments, utilities, strata fees if applicable, insurance such as home and contents insurance, car expenses like petrol and registration, groceries, fun money, and anything else you regularly spend money on.

You should now have a clear idea of how much money you have to play with, and you might also find you can cut costs in certain areas (like unused gym memberships) and reallocate them elsewhere (like a savings account).

2.   Make sure you have a rainy-day fund

On that note, it’s always a good idea to put some of your budget towards a rainy-day fund.

This is a reserve you can lean on if you come up against unexpected costs, like medical bills or car repairs.

A rainy-day fund is also critical if you suddenly lose your income and need to live off savings for a period of time.

Generally, aim to have 3-6 months’ worth of emergency funds put aside, so you can have some peace of mind in the case of emergencies.

3.   Set up different bank accounts

A great way to organise your money can be to set up multiple bank accounts.

Having different accounts for different objectives also makes it easier to track where your money is going.

Know exactly where your money is going by separating finances for different commitments. Picture: Getty

You could have one account for expenses, one for savings (or two accounts split into short and long-term savings), one for your rainy-day fund and as many other accounts as you need to manage your money.

Check with your bank about your options for extra accounts.

4.   Open an offset account

While you’re at it, you might want to investigate setting up an offset account.

An offset account works much like an everyday transaction account where you can deposit your salary each pay cycle and access money whenever you want.

However, the difference is that it’s connected to your home loan. The amount sitting in this account can be used to offset the balance of your home loan, which may save you money in the long term.

For example, if you have $50,000 in your offset account and an outstanding loan balance of $650,000. This means you’ll only pay interest on $600,000.

You can chat to your home loan provider about whether you’re eligible for an offset account.

5.   Have a ‘just-in-case’ back-up plan

“The number one asset that you have when you’re purchasing a first home is your ability to earn an income,” says Tim.

But what happens if you suddenly lose your job or you’re unable to work and can’t make your home loan repayments?

Tim says this is where knowing your super benefits can come in handy.

“Most super funds offer a variety of insurance options to members,” he says.

“At Spirit Super, members have the option to pay for income protection insurance, as well as total and permanent disablement cover if they can no longer work due to a disabling injury or illness.”

Tim adds that the advantage of paying for insurance within your super fund is that it doesn’t  come out of your day-to-day cash flow, although it does reduce your overall super balance.

He recommends logging into your super account online and reviewing your insurance options to make sure they’re right for your circumstances.

6.   Don’t forget to think long-term

While you’re probably putting most (or all) of your energy into paying off your home loan now, you don’t want to lose sight of your future finances – that is, your wealth once you retire.

Use this time as a chance to get on top of your super and ensure you’re accruing as much money as possible before retirement.

It’s easy to get caught up in the here and now, but always keep a long term lens on finances. Picture: Getty

Tim says there are four main things you should think about to maximise your super: extra contributions, investments, fees and your fund’s performance. To help you with this, Spirit Super members can also access financial advice at no extra cost.

Additional super contributions

Even though your employer makes mandatory contributions to your super account, you can also make additional contributions to boost your balance, which is a great option if you can afford to put a little extra cash aside.

Not only can you accrue extra interest on your balance by having more money in your super account, but you may also be able to take advantage of tax savings on any additional contributions.

Super investments

Look at how the money in your super is being invested. You can adjust your investments to suit your goals and appetite for risk, with options usually ranging from conservative to high growth.

Tim says you’re best chatting to a consultant, such as a Spirit Super Adviser, before changing your investments to ensure they work for your situation.

“Everyone’s retirement goals are different, and these will change throughout your life. Talking to an expert can really help you get the most out of your super.”

Super fees and performance

Tim says you should know what you’re paying for your super fund and compare it against the fund’s performance. You might find that other funds charge less and still perform better.

Spirit Super, is an industry super fund, meaning fees and costs are kept low to ensure members’ money works harder for them ahead of retirement.

In fact, Spirit Super’s annual fees on a super account with a $50,000 balance and Balanced (MySuper) investment options are $475, compared to the national median of $490*.

And yet, Spirit Super maintains a history of strong long-term returns for members, averaging 7.60% pa over 10 years in Balanced (My Super) (to 31 May 2023).


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