Younger people are having difficulty breaking into the housing market according to the Household, Income and Labour Dynamics in Australia (HILDA) survey.

The report found that home ownership for the under-40s has dropped significantly since 2002. And those who have made it into the market are not paying off their mortgage at the same rate. The average debt of homeowners between 18-39 years of age has almost doubled between 2002 and 2014.

One of the issues affecting young people is the fact that wages remain stagnant, with little growth in recent years. And house prices have increased significantly in the last decade, largely driven by investors, both on and off-shore.

Experts suggest that another reason debt for young people is increasing, is that many people are accessing equity to fund living expenses.

Even though there are challenges facing young people getting into the property market, all is not lost. Here, we provide some tips to consider when saving for your first home deposit.

Set a goal

Financial goals are a great way to get your finances in order. Find out the deposit you need, and set your target. Knowing where you are heading helps you make purchasing decisions. For instance, you might decide you don’t need those new shoes as much as you want your first home.

Set up a saving account

Regularly direct savings into a separate bank account, with a good interest rate, and consider this money ‘off limits’. Work out how much you can spare each week, and know that this money is going to a good home – that is, your first home deposit. If the interest is good, this money should accumulate over time.

Create a budget

Tracking your money and making a budget is a great way to stay on top of your finances. A simple way is to list your typical expenses for the month, allowing for miscellaneous expenses that might crop up. Then make a list of your expected income for the month. Calculate the approximate difference. You can use spreadsheet software like Excel. Or a paper, pen and calculator will also do the trick.

If your expenses are significantly more than your typical income, you might need to seek financial advice to look at ways of reducing your expenses or increasing your income. Little things, like not going out for meals or buying new clothes, can make a big difference.

Allow for incidentals and tax

When you do your budget, make sure you plan for the unexpected, like possible health-related costs or unexpected travel costs. Also make sure you include tax in your calculations. There is nothing worse than moving towards your deposit goal, then getting set back by an unexpected bill. If you plan for realistic future costs, you avoid disappointment when those costs arise.

Use credit sparingly

Credit cards make it incredibly easy to spend money. Knowing you have a possible $15,000 at your fingertips means you are more likely to spend it. The trap is that credit incurs interest, especially when you don’t pay your bill on time. And ultimately, this will cost you more.

Avoid the rut of credit debt by aiming to only spend what you have at the time. And if you do need that new TV, well… it might be time to do a new budget.

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DISCLAIMER: The information contained in this article is correct at the time of publishing and is subject to change. It is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, Smartline recommends that you consider whether it is appropriate for your circumstances. Smartline recommends that you seek independent legal, financial, and taxation advice before acting on any information in this article.