When the kids are little and oh so sweet it is hard to imagine ever wanting them to leave the nest but as any parent of a young adult can tell you, this changes.
Their comes a point in every parent’s life where it is time to gently nudge that child out and today we will discuss what they need to know as far as the world of financing is concerned.
1. Saving money has nothing to do with how much you earn. If it did then professional athletes would not declare bankruptcy and a fast food worker would have no hope of buying a home. Saving money is a habit like any other and as such can be learned and cultivated. If you make the savings an automatic monthly withdrawal then you will never be faced with an excruciating choice between those new shoes or to save. You will know that the savings have been taken care of so the money that’s left after the bills are paid is yours to do with what you will.
Working with a qualified financial planner is a great idea. These folks will help you set a plan for your short and long term goals
2. You have to have at least two things reporting on your credit bureau. Your credit bureau is your financial report card. A prospective lender will use the information to determine if the applicant is a strong candidate for a mortgage. The keys to a strong credit score are this:
• Do not exceed 75% of the available credit limit on your credit card but be sure to use it. Credit cards are not evil. They are a tool like any other and one you will need to book a trip or shop online.
• Make all of your payments on time.
• Cell phones report on your credit bureau so make sure it gets paid.
• Even if you end up moving around, the onus is on you to pay those bills. Make sure the utility companies can find you for that last bill after a move. Consider e-statements as those will follow you.
• Don’t let too many companies pull your credit. It can be an indication of financial troubles whereby you are seeking out additional credit to help you pay for the bills you already have.
3. Consider your expenses carefully. That amazing F150 truly is fantastic but is it worth having to rent instead of buy? A large vehicle payment can put your affordability over what is allowable by mortgage lenders.
4. Once you have saved the down payment and established your credit then you are ready to look for that perfect home.
But before you get caught up in granite and hardwood and all those other pretty things I would suggest you ask yourself, do I really need all this? A starter home can be turned into a rental property in a few years very easily. Think long term and plan wisely.
5. What about a roommate? Think of your friends who were not fortunate enough to have read this article. While they are in the process of establishing their own credit why not have them move in with you as a mortgage helper or savings account booster?
And there you have it my friends. A way you can get the kids out of the house and into their own and actually well set up for life down the road.
Pam Pikkert is a mortgage broker with Dominion Lending Centres – Regional Mortgage Group in Red Deer.