GETTING PSYCHED UP TO BUY

Owning your own home is most people’s idea of security and stability. It means they can put an end to having to move house on the whim of a landlord who has other plans once the lease is up. Financially it’s one of the proven ways to beat inflation, provided the property purchased is well-chosen. But buying a home requires a level of commitment and sacrifice, an ability to defer gratification that doesn’t always marry well with the desire to spend money on day to day consumer items. Many young people complain that once they’ve paid rent, car payments, phone bill, credit card and so on there never seems to be much left out of the pay packet for saving for a deposit; is it possible, in fact, that they have chosen lifestyle options over future security and are not prepared to make the sacrifices necessary to gain home ownership? Could many of the items they spend on their credit card be done without? There is a lot to be said for not getting used to a spending lifestyle, of learning to save young; once you get used to living up to your income (and often beyond!), it is hard to give up the little extras (new clothes, restaurants, holidays) you have got used to.

Investment-conscious people recognise the difference between an asset and a liability and minimise expenditure on liabilities. Holidays, credits cards, designer clothes and flash electronic gear may be fun but they don’t put money in the bank for saving home deposits, or leave spare income for paying off a mortgage. Not everyone has the saving mentality but for those that can psych themselves up to save rather than spend usually find that they are in a better position in ten years time than their non-saving peers; they are more likely to be able to afford the good things of life further down the track as well as owning their own home once their equity increases as the loan has been paid off and the property rises in value. Interestingly, because incomes don’t keep pace with inflation, those who rent find themselves spending proportionately more of their income on the roof over their head, which means that in ten years time they are less able to afford the good things of life they weren’t prepared to give up when they were younger

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