At face value, the path to homeownership seems pretty straightforward. You have to work hard, save enough money over several years and when you are ready, look for a suitable house and make the down payment.

In practice, it is no longer that simple. Getting on the property ladder is getting harder for millions of Australian buyers, especially the first time buyers. To purchase a home in a good location in the Melbourne area, you will need substantial savings.

This is quite ironic because this is becoming out of reach at a time when Australia enjoys a relatively good saving rate. Why is this so?

Lack of Discipline
Saving large sums of money requires incredible discipline on your part. You must have a deep sense of commitment, accountability and discipline to build wealth. If you are spending more money than you are earning, it is virtually impossible to have set aside a considerable nest egg. It doesn’t matter how much money you earn; as long as your needs are greater than your earnings, you are not going to hit your financial goals. It is also advisable to reign in compulsive spending begin tracking your financial spending.

It is the silent factor that will hinder your saving goals without you even realising it. Inflation does not wipe your wealth and savings right away, it does it over time, nibbling away at your cash little by little. Inflation is a factor that is obviously out of your control but you can take steps to mitigate its effects and maximise your savings.

Emergencies are generally a financial tragedy because they are not planned for. They may take various forms such as unemployment, injury, incapacitation or even death of a partner and the financial hole left is generally hard to plug in. You can also mitigate the impact of emergencies by having an emergency fund and buying an insurance policy against any of these potential eventualities.

Costly Investment Mistakes
Costly investment mistakes can easily wipe out your assets. It is always advisable to have a strong structural investment portfolio that will withstand a few shocks here and there without wiping away your savings. Diversify your investments as much as possible in order to minimise the impact of bad investments.

Debt gives a lot of leverage but you should take care to avoid accumulating bad debts as they will confine you to financial ruin. Consumer debt eats deeply into your finances and savings and inhibits your ability to set aside some money for your savings. Bad debts can also ruin your credit profile and knock you off the credit market.

Taxes take a huge chunk of your income but you still have to meet your tax obligations. Work with a professional tax advisor to help you keep your tax burdens as low as possible through legal means.

Are you the kind of person who always wants to acquire the next gadgets such as the latest iPhone, sounds system, TV etc? Then you are unlikely to save much. To set aside a good nest egg, you must rein some of your spending impulses.