Saving plan for planned new house construction in 4-5 years

Hello dear forum members,

after reading a lot on the internet and exploring countless options, I have decided to finally register here in the forum. I originally wanted to do this only when the time actually came, but it’s really burning under my nails and I wanted to get some ideas on how we can best achieve our goal.

As you can probably imagine, I want to acquire property. Specifically, my girlfriend and I want to build a house together. As a rough start, we have targeted the next 4-5 years for this.

Current situation

I am 28 years old and work as an IT consultant, my girlfriend is 24 and works as a childcare worker. So far we haven’t really been able to save because I only started working three years ago after university and we first wanted to enjoy life a bit. And since there were still some old financial burdens, not much money was left in the end. Currently, the situation is different. Some items have been paid off and now I “only” have to pay the student loan and Bafög for the next period. Since this will take about 3 more years, the plan is to build the house in 4-5 years. And of course also because we still need to build a foundation. Don’t ask why, for example, I took a student loan – I personally regret that decision the most and basically call it a “youthful mistake” that I’m still struggling with today.

The desire for my own house has basically always been there, but now the urge to put the plan into action is growing stronger. Building a house means a large part of my life goal personally and, of course, a not insignificant retirement provision. For me, there is basically no alternative.

Long story short: This means we’re starting from scratch.

Currently, we have the following monthly figures:

Income together: 2500 (fixed without bonus) + 1700 net
Fixed expenses including car: approx. 1900€
Expenses for groceries/pets etc.: approx. 600€

Target situation

We want to save as large an amount as possible from the remaining money after deducting the above figures, in order to build up equity for the house. We want to build a prefabricated house that meets the KFW-55 standard. This of course also helps us with KfW funding.

I have worked a lot with the numbers and calculated how the world will look in 3 years (i.e., just before the house build). It is certain that by then all the old debts will be paid off and after reducing other expenses (for example, the phone contract doesn’t have to be the expensive one and will be adjusted – just as an example) I come to the following values:

Fixed expenses: 540 € (without rent and electricity)

For the income I can only speculate, so I am using the current values here. It is assumed that my salary will have risen by 15% by that time, but I am not including this fixedly in the calculation. Then of course there is the question of when a child will come. This would mean – temporarily – that my girlfriend’s salary would be significantly lower.

Where am I actually looking for help?

The question now is how you would suggest we best reach our goal. Should we simply save hard cash (on a daily allowance account) or maybe also take out a building savings contract? I want to gather ideas and prepare well so that we can make our dream come true.

The restrictions should of course be designed in such a way that we don’t have to watch the money when eating or similar. Since the saving period is quite long, it should also be “bearable.”

I look forward to your answers and of course your help :)

You have already recognized the two sensible investment options. If you think interest rates will rise and you want to lock them in, take the [Bausparer]. However, it costs closing fees and the interest on the balance is lousy. But if the interest rate level rises and you actually build, you have won the bet. Otherwise, not. In general: If you really NEED money and even roughly know the timing, this money is not for riskier investment forms. [Tagesgeld], [Festgeld] are the right options here, but the returns are rather slim. I would, however, in your position, start saving for the big goal, but don’t get fixated on having to build soon. You have just started your career and if you become immobile now, you are throttling your chance to significantly increase your salary. IT consultant, like all titles in the industry, is of course flexible, there are always different kinds, but doubling your income by your mid-30s is not out of the question. But you need to know that. If you absolutely want to stay in your location or have many alternative employers in the area, then that is an important decision factor.

The thing is pretty simple.

From now on, put aside 1700 euros monthly.
The bonus and Christmas bonus and things like that go towards extras outside the regular savings.

Then in 5 years, with 10,000 euros, you will have a solid cushion to realize your dream.

Because (depending on the situation) the project will cost you 400-500,000 euros (all in).

In 5 years, with 1700 euros + saved rent, you will also have enough liquidity available to cover the loan installment, operating costs, and build reserves.

If your salary increases... great... 50% consumption, the remaining 50% savings. Kitchen, furniture, and cars also have to be bought/replaced at some point.

Regarding the form of saving: out of sight, out of mind, the main thing is value stability and availability in 4-5 years. Tagesgeld, savings account, notice money, money market funds, capital market funds/target funds with capital guarantee for 2023...

So I would put it, if you like it simple, into a Tagesgeld or savings account.

Please also note that property prices are likely to continue rising in the coming years and the current calculation may no longer be accurate. With persistently low interest rates and a lack of alternatives for investment, property prices will continue to rise. However, if interest rates unexpectedly increase and property prices remain stable, the monthly burden will be higher. It is very likely that the economic conditions at the desired time of purchase will look different than currently assumed. At least the interest rate risk could be mitigated with a [Bausparvertrag]. Depending on how strong the desire for a home is, in my opinion, that would be the safest way. In the event that interest rates rise and prices fall, this would be the best approach.

How about [ETW]? Possibly a way to get into ownership sooner. As an IT consultant, your salary is meager in the age of digitalization... so step on it. Otherwise, keep in mind that your girlfriend will also become a mother at some point. Costs in the form of expenses and part-time work.

.. just a question .. 2500 net, so about 4250 gross = 51000 annual salary plus bonus etc., do you find that low for a 28-year-old after 3 years of work experience in Franconia? What do you think should be expected?

.. I would, as toxicmolotow recommended, just start by consistently putting what should be left over according to calculations into a daily allowance account for a year. Then you’ll gain experience on how hard or easy it is for you. Be flexible too if the desire to have children is realized soon. And after that, you can see what to do next (and of course save ;) ).