Would You Give Your Parents Your Pay And Ask For Pocket Money?

This woman did and guess what happened next.

Owning your own home is the great Australian dream. At least it used to be. Today a vast number of us feel it's more of a fantasy and one that's quickly slipping through our fingers.

This is because the cost of living and renting -- particularly in our over-priced capital cities -- makes saving incredibly difficult. But not impossibly says Emily Power, author of How to Buy a Home (Vintage Australia, $29.99).

Image: Morganna Magee.

In the book Emily reveals how she managed to get her finances into gear so that she could scrape together enough funds to buy a house of her own.  And before you read on we need to flag something with you. Emily's plan was pretty drastic -- still it worked. You ready? Here's what she did. She handed over her wages every single week to her parents. Her parents then doled out spending money so that Emily could buy a few drinks and the occasional pair of shoes.

Okay. It's not for the fainthearted. But, guess what -- it worked. So, if you're truly desperate to save a few bucks and you've tried everything else, you might like to consider it.

How does it work?

The Pocket Money Savings Plan works like this: your salary is deposited into a bank account in your parents' names, so that you don't know the internet banking passwords and have no way of to dip into it on a whim.

Your bills, including rent, mobile phone charges and car repayments, are direct-debited from your salary account, so it mostly sits idle.

Once  a week, You receive $200 in 'pocket money', which you live on and use to pay for food, transport, entertainment and incidentals. The pocket money can also be transferred fortnightly, if you wish.

The trial period

It will take a month to get rolling properly on the plan, with preparation needed to make sure you don’t have a stressful misstep.

Week 1

Spend as you normally would – analyse your expenditure in a normal, free-wheeling week, and learn where the wastage is.

Did you need the organic oranges, or would the regular ones be sufficient? Home-brand pasta – could you learn to enjoy it as much as the imported egg versions? Should you have bought that shampoo that was on special when you haven’t finished the bottle in your shower? Would your friends have been offended if you suggested buying your own drinks at the pub instead of shouting rounds?

Note down everything – in my experience, it is the small costs that often make the greatest difference.

Week 2

Exercise discipline and test yourself – just how low can you go? This amount will be your ‘pocket money’.

Run a red pen through everything in your notes from week one that was dispensable, allowing some cash for simple pleasures. For example, I have two takeaway coffees a week and have about $50 for going out with friends.

You may wish to start conservatively, with room to wriggle. I began on $200 a week, with the option to go up to $350 if I knew I would need to catch a cab, buy a birthday present or go to the doctor. I was launching from a low base and wanted to see the balance grow quickly, for encouragement, so I preferred to start at the frugal end.

Week 3

This is your time for trial and error, when you nominate your financial gatekeeper – in my case, Mum and Dad.

Withdraw your pocket money in cash but retain access to the salary this week, just in case you break the rules. If you have miscalculated how much pocket money you need, you’ll get caught in awkward positions, usually red-faced at a cash register. Heartbreak leads to failure.

Week 4

If you’ve been successful so far, ask your gatekeeper to open an account in their name, in which your salary will be deposited. Change over your direct debit details to this account for rent and bills. You’ll also need a low-fee, everyday debit account – mine is with ANZ – into which your gatekeeper will transfer your weekly pocket money.

When it comes to pocket money transfers from your gatekeeper, be mindful these might take 24 hours to process. Early on, I was caught short several times with a transfer that was made on a Friday but didn’t clear in my account until Tuesday. The upside of the delay is that you become more aware of what you are spending; enduring 24 hours before you access the money is motivation for planning ahead, and provides breathing room to consider if any purchases you have been pondering are really necessary.

This is an edited extract from How to Buy a Home by Emily Power ($29.99, Vintage Australia).

Feature image: Getty.