Note: This blog post is a sponsored conversation written by Lynn Smythe, the Founder and Chief Blogger for The Creative Cottage lifestyle blog. The opinions, thoughts, ideas and text are all mine.
Millennials have it rough. The average age for a first-time homeowner has skyrocketed from around 25 in the 1970s to over 32 today. The reasons for this comes as no surprise to economists. Wages have been flat for most of the last quarter century, and house prices have continued to soar.
What’s more, prices in cities with the most lucrative jobs are even higher, and there’s a limited supply. Student loan debt doesn’t help either. It’s all combined to create a situation where young people have to rent for decades, rather than just a couple of years as they find their feet in the job market.
Are you looking to get onto the property ladder? Here are a few tips on how to become a new homeowner, without waiting until you’re old and gray.
Stop Eating Out
If you want to get on the property ladder, the first thing to do is start saving money. The average first-time buyer deposit is currently running at around $50,000 for a first-time house, meaning that you need a lot of money in the kitty before a bank manager considers you for a mortgage.
Millennials aren’t particularly good at saving. Around a quarter have no savings whatsoever, and most have less than $10,000. It’s no surprise, therefore, that the majority believe that owning a home is permanently out of reach.
Earning more is one possibility but so too is cooking more food at home. Food comprises around 20 percent of the average millennial’s budget. And food prepared outside of the house (including restaurant meals and takeaways) contributes to 50 percent of that. Stopping eating out, therefore, could save you 10 percent of your monthly budget, allowing you to put money away and save a substantial chunk of your income for your deposit.
Pay Less Rent Today
Renting isn’t throwing money down the drain because you get housing services in return. It is, however, a big chunk of your budget and yet another thing that might be getting in the way of your savings goals.
In general, financial experts recommend that you spend around 25 percent of your after-tax income on rent. Many millennials are spending more like 45 percent, which cuts out money for other things. You might not think so, but finding an apartment within your budget is easy when you have budgeting reports that are local to your city. You can track rental prices and look for new properties that will reduce your total outgoings.
Find Your Perfect Home
If you’re the kind of person who likes quick fixes, then the housing market will leave you disappointed. Buying and owning a property is a substantial life commitment – something that’s hard to achieve because of the sheer financial outlay. If you want to get there, you’ll have to be patient: there aren’t any short cuts.
If you’re trying to be a new homeowner, the first thing to do is to find your ideal property. This will serve as motivation to help you save money. Knowing the kind of home in which you’d like to live can help you forgo buying takeaways today and make up for the fact that you live in a small apartment.
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