There is one thing that made the biggest impact for us a few years ago when we started:
Seven years ago, we were a couple on a single income of under 30k in London with about 5k in savings. I’m sure it isn’t a surpise that we had to dip into our savings almost every month, just to pay our bills, and they went down to almost 0.
We realised this couldn’t go on like this (buying a house was far far off - not in our wildest dreams!) So we made a budget and stuck to it. In the first year, we just about managed to get even. Huge relief, I tell you!
Due to having successive pay rises over the next several years, and aggressively sticking to our budget (I had set up standing orders to put any money that wasn’t budgeted for into a “savings account” just after payday) we manged to save up enough money to buy a house just outside London last year. (Just to refute @DonPedro: Our combined houshold income was less than 50k until last year - when we had our mortage agreed it was just above 40k. We lived in London, at the time, now a family of four. It’s possible! You just have to be careful.)
Our budget did include overseas trips, going out, etc. But just being strict with yourself makes an amazing difference!
A few more specific things:
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Savings:
- Depending on your attitude to risk put your money into a mix of high interest savings accounts / ISAs / investements.
- DON’T use interest-less pots. (seriously! You are throwing money away if you do!)
- Consider getting a LISA or Help to Buy ISA, but research the pros and cons of each
- Current accounts often pay higher interest rates (3-5%) than savings accounts (1-2%). Savings accounts usually pay more interest than ISAs (<1%), and if you are a basic rate tax payer your interest income is unlikely to be taxed anyway.
- In short: At the current climate I don’t think ISAs are worth it, at least not for short-medium terms savings.
- Regularly review any savings accounts you may have. Interest rates change, so put it in your diary at least once a year to check that you are really still getting a good deal!
- Get cashback wherever you can: A cashback credit card, and a bank account that pays cashback. This is probably going to be a bit of a hard swallow for you, but have a look - I make almost ÂŁ400 p.a. in cashback for stuff I do anyway.
- By putting all my spending on credit cards, I can put my salary in an interest paying account from payday to credit card due date as well, thus gaining extra interest.
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credit cards Use them wisely:
- Make at least the minimum payment every month.
- If at all possible pay off the full balance.
- Don’t get cash advances.
- In the 6 months before you apply for your mortgage consider not using them: Not having outstanding credit is positive.
- Most importantly: Don’t use your credit card to buy stuff you didn’t budget for!!!
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Credit ratings:
- Get a copy of all three reports now. Gives you plenty of time to correct any errors that might be on there. And monitor them over the years to ensure no new errors crop up.
- Make sure you have a current account that reports on all three CRAs (i.e. not Monzo) to ensure no lender thinks you don’t have a current account.
- Don’t default on any payments (i.e. don’t be late to pay your utility bills etc)
- If you are eligible make sure you are registered to vote.
Good luck!
[edit: I know: lots of MSE links. Loathe them or love them, they are a good starting point in my opinion, but don’t think I think MSE is perfect: Don’t take them as gospel - but if these concepts are foreign to you, these links can help you get started.]