Practical advice for 20-somethings who would like to own their own home

Spoiler: It’s about creating good habits now, so future you doesn’t have to rent.

By Erin Cook

Let’s wind back a few weeks, shall we? To simpler times, before Trump was announced as President-elect, when Bernard Salt penned this scathing take down of gen Y for The Australian.

We have a feeling you’ll remember Salt’s column well. In it, he argued that the whole reason that Gen Y can't afford a house deposit is because they waste their hard earned dosh on frivolous things like avocado on toast.

Right or wrong, his argument struck a chord. Mostly because having financial stability would be kind of nice. But a lot of today’s youth - present company included – wouldn’t even know where to start. So we spoke to Sofie Korac from Prudentia Financial Planning to find out what twenty-somethings should be doing now to set themselves up for the future.

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Cosmo: Where do we start?

Sofie: There are two ways to save. The first way is the boring way – you sit down, you do a budget, you work out what are your must-pays. The things you absolutely have to pay, or you won’t survive. Things like food, groceries, your phone, your electricity and all those essential items. You’ll soon realise you can’t do a lot in terms of making big reductions here as these are essential items. You can shop around for a cheaper provider for your phone but they’re things like are aren’t going to make huge dents. Then you look at your discressionaries; the things you pay that aren’t essential. You know, like going out with friends, going to gigs, whatever.

Of course we have to have a life. Life is not about working to deprive yourself forever and a day – it’s a balance between saving for future things but also having a good time now because otherwise life’s not worth living, right? Putting together a budget is one option but a lot of people struggle with a budget. I know I do!

I think it might be the stigma attached to a budget. It’s like a diet. The word itself feels restrictive.

Yes, it does. So I have a thing called a reverse budget.

Okay. I’m listening

You make a commitment to yourself, like, “I am going to put aside, let’s just say, 10% of my take home pay”. How do you get paid – weekly, monthly, fortnightly?


Okay. On the day you get paid into your bank account, set up a direct recurring transfer. Most accounts have this feature. Work out 10% of your salary and send that off to another bank account or an online account as soon as you get paid and don’t look at that account for 12 months. Just going to live off what’s left. When you first do it, you’ll find you run out of money, but I’m telling you, 10% is not a lot. But it feels a lot if you’re used to spending everything.

Yeah – if you’re used to using that as your fun, excess money then you’ll notice.

Yeah, that’s right, you will notice it, however, if you have a goal in mind and you’re really committed you’ll make it work. For example, what are you trying to save up for? Have you got something in particular?

I’m going overseas over New Years and I’m paying off that trip as I put it on a credit card.

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And your credit card is at what interest rate?


How much are you paying off your credit card at the moment?

Well, I’m putting $200 a fortnight off it.

Okay. And has that stretched you at all?

Um, no it’s been okay.

Okay, that’s your problem. It hasn’t stretched you. You’ve got to be stretched – seriously.

Damn it!

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Because this is how your mind works. When you're stretched you find ways to save money. I kid you not. Let’s just say, for an exercise, bump it up to 300 a fortnight and then bump it up to 400 a fortnight and you might then realise you can’t do it anymore, so you go back to 300 a fortnight. You’ll soon find out what it is you really don’t need in your life, in terms of excess.

Have a picture of your trip up on your fridge or somewhere and next to it have a big, 'I’m paying 18% extra to the bank' note. However much you’ve paid for your trip, you’ve paid an extra 18% so that profit is going to the bank, not to your pocket.

You pay yourself first. In your case, instead of paying into a second bank account - which you would do once you’ve paid off your credit card.

First step is to get rid of that credit card. This bit is really important! If you end up feeling like 300 a fortnight is too much of a stretch and you want to go back to 200, try and stop yourself. Try to say ‘nope, nope, I’ve got to find a way to do this’. Because then your brain will come up with ways to save money. And once you’ve got rid of that credit card debt, you can just keep paying that money into your savings.

So, what would you say if someone in their 20s – say, me – was looking to buy a house in 10 years, is that how you would say is the best way to start off? By paying yourself first and saving the 10% each fortnight?

Yeah. Treat this ‘pay yourself first’ the same way you would treat paying off your credit card. As in, I’m really going to be in the poo if I don’t do this. I’m going to be renting for the rest of my life if I don’t do this. Paying yourself first is not a deprivation. It’s actually your reward because you’re going to have this pot of money at the end of 10 years and you’re going to be able to buy a property.

I’m still struggling to imagine being able to own a place like what I’m renting now…

If you like where you live but you can’t afford to buy there, you might decide not to buy a house to live in, but to buy an investment property instead. Either way you’re getting on your wealth creation journey. But it has to be with pay yourself first. It has to start with saving.

You’re more likely to do it if you master that ability to not see it as depriving yourself of money. When you feel like that money you’re saving is for you, for your future, like this is a really good thing, then you’ll be successful at it.

I guess it’s psychology, you know. It’s the reward.

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Absolutely. I say to clients, if you’re finding it really hard to save money and you can’t get out of living from pay packet to pay packet, it’s all psychological. We buy stuff to make ourselves feel good. If you can feel good without buying stuff, you’re going to blitz it.

I mean, yeah, there’s the basics: your food, rent, transport but then on top of that it’s all excess, feel good stuff.

I’m not saying don’t socialise but you might find ways to socialise that don’t cost a lot of money. And picking and choosing what you want to do rather than saying yes to everything.

Okay, so back to the house. Do you start with pay yourself first and then put that nest egg away and just wait for it to keep growing?

Yeah and look, you can even put it into a high interest saving account. There are bank accounts around where they give you bonus interest if you don’t make a withdrawal. So that’s another benefit to keep putting money aside into the account. Don’t make a withdrawal, you’ll get the bonus interest.

I didn’t know that. Interesting.

Again, you’ve got to shop around and find the best deal. It doesn’t have to be a bank, it could be a credit union.

The other alternative is to put the money aside into a managed fund or some kind of investment option where they have a savings plan attached to it so the money then grows more than it would in cash. But if you’re just starting out I wouldn’t be recommending direct equities or direct shares because you really want to start off slowly. One step at a time.


  • Budgets are no fun, reverse budgets on the other hand…
  • Pay yourself first.
  • Put at least 10% of your take-home pay packet away in a separate savings account. Don’t look at it for 12 months and be pleasantly surprised (read: smug) at how much you’ve accumulated.
  • If you have a credit card, pay that off first. Once you’ve paid off your credit card, keep putting the same amount away into a savings account. Don’t stop putting money away just because you’re
    in the clear. Use this newfound lack-of-a-credit-card to start a nest egg.
  • If you’re finding it easy to save, you’re not saving enough money. You should be a little bit stretched each week.
  • It’s fine to socialise but you should be choosy where you spend your money. (Pick the muesli at brunch, rather than the eggs Benedict, for once in your life.)
  • Shop around for a high interest savings account. This might mean researching credit unions, as well at the big banks.
  • Think about putting money into a managed fund, with a savings plan attached for maximum growth.
  • If you can’t afford to buy in your area, perhaps an investment property is more up your alley.
  • Buying a house isn’t for everyone, but getting financially stable is. Look at all financial options, including putting more money into your super.

We found Sofie thanks to Adviser Ratings – an online platform that helps consumers find and rate qualified financial advisers.