7 Financial Planners Spill The Beans On How To Unlock Your First Home
Financial planners are experts at putting themselves in their clients’ shoes to give advice about investments. However, not everyone has the luxury of soliciting professional advice to achieve the goal of buying their first home.
We decided to give you a head start on this and have asked seven licenced planners this question:
How can I save up to buy my first home in Malaysia?
Here’s the advice given to realise your dream of owning your first property:
1. Exercise delayed gratification
The first stumbling block most people face when it comes to buying their first home is in saving up for the 10% initial payment and other miscellaneous fees. The best way to do this is by exercising delayed gratification – reduce your luxuries now to enjoy even greater luxuries later.
This could be practiced in many ways like opting to use an outdated mobile phone or driving a modest second-hand car. Reducing these expenses helps to build up personal savings that can form the bedrock for the down payment on your home.
Relentless attention should also be paid to improving your personal cash flow by maximising cash inflows and minimising cash outflows. This is best done by working hard to increase income and practising delayed gratification to reduce your expenses.
You can also utilise the money in EPF Account 2 to maximise the size of the initial payment and to minimise the amount borrowed.
– Rajen Devadason, CFP, Securities Commission-licensed financial planner with MAAKL Mutual Bhd and CEO of RD WealthCreation Sdn Bhd
2. Begin with the end in mind
Buying your first property is often one of the biggest events in your life and as such you should begin with the end in mind. Do not make the mistake of rushing into buying or entering into any investment or savings plan without proper planning.
Start with your aspiration. Understand why you need it, identify the type of house you want to get, where it should be located, when do you need it and how much it costs.
“You want your ‘home’ to bring you joy and not quarrels over the debts in the long run.”
Then, come up with a suitable regular investment or savings plan to help you achieve your goal. If you can’t afford to buy your dream house yet, consider renting or start small. Home is not only a place where we live but where we belong to. You want your “home” to bring you joy and not quarrels over the debts in the long run.
– Sin Chee Kwan, CFP, Chief Executive Officer of Fin Freedom Sdn Bhd
3. Sacrifice now for bigger gains later
It’s a norm to live on credit in today’s economic climate. Spending is much easier than saving, especially saving for a big ticket item like your first home. It is increasingly hard for an average Gen-Y to buy a house of their dreams. However, it’s our financial behaviour, not financial mathematics that determines the success of this goal:
- Save before spend – Have the discipline to save your targeted amount every month.
- Increase the pain of paying – Only use cash or debit cards when you spend.
- Delayed gratification – Detach yourself from marketing ploys and live within your means.
- Don’t be greedy – Don’t gamble on get rich quick schemes as these invite default and speculative risks.
- Be diligent in working and spending – Work hard to make more and focus on saving to build up your reserves faster.
– Gavin Teoh Hock Geh, CFP, IFP, B.Sc(Hons), Director of Advisory & Practice Management, CMSRL/A3564/2007, Centum Sage Advisory