7 Financial Planners Spill The Beans On How To Unlock Your First Home
4. Inculcate the habit of saving
Start saving as soon as you start receiving an income, be it angpow, pocket money or salary. The most important part in the act of saving is not the amount but the habit. Inculcate this habit by first putting aside a minimum amount of money regularly, before you even get a chance to spend it.
“The most important part in the act of saving is not the amount but the habit.”
The best time to save is now! The sooner you start saving, the more you will accumulate. Since you have longer time horizon (due to your young age), invest the money wisely and regularly to help you grow your money.
Always choose the right investment vehicle that suits your risk appetite.
– Datin Alice Neow Ean Lee, CFP, IFP, Associate Director – Financial Planning for Women, A.D. Financial Sdn Bhd
5. Start planning early
Your plan to buy a home should start the moment you get your first job, and not a year before you get married. Make it your top priority and aim to purchase your first property before you get married because after you are married, your spouse will often influence your choice of property.
You can use this commitment to push yourself to work harder to earn more money. To save up for your first house, keep your living expenses below 50% of your take home income.
“Reduce expenses that do not put money into your pocket.”
Save and invest the rest, about 20% to 30% for house. If you need a car, buy a used car instead of a new one, so that you can allocate more money for property. Maintain a good record of debt repayment so that it does not jeopardise your chances of getting a home loan.
Reduce expenses that do not put money into your pocket. All these will help you to cultivate the habit of saving for the future and spending within your means.
– SP Lim, CFP Licensed Financial Planner, Wilfred Consultancy
6. Don’t underestimate the power of budget
Before we get on to the common phrase of property, “location, location, location”, let’s start with the first and more important step – budget, budget, budget. For those considering to save for their first house, always start with a budget.
“Before we get on to the common phrase of property, “location, location, location”, let’s start with the first ands more important step – budget, budget, budget.”
With so many financial expectations and limited resources, getting the first property can be a huge financial burden. Like any financial plan, the first steps anyone should take are:-
- Reassess your current cash flow against current income.
- Categorise expenses as needs and wants, remove those that can wait.
- Save up adequate emergency funds before planning to save for first house. Put aside at least three to six months of expenses.
- Establish the appropriate budget to own a home. For example, if you have RM1,000 a month to play around with, work out a specific plan to achieve your goal by planning how long it would take to save for the 10% down payment.
- From the budgeting, shortlist the types of homes that you can afford to purchase. No point trying to commit to what you cannot pay for in the future. After all, the first house is not an investment but a necessity.
- If the timeframe is short (less than 3 years) to save, it is advisable to place your savings in a fixed deposit account or other low risk investment vehicles like fixed income or bond.
- For longer time frames (more than 5 years), consider placing part of your savings in a balanced fund or income fund depending on risk tolerances, and the remaining in fixed deposit – having more time allows you to take slightly more risk.
- Don’t forget the additional expenses that incur when purchasing a new home, such as, legal fees, stamp duties and also furnishing.
- Finally, make sure all your assets, liabilities and incomes are protected by having comprehensive insurance coverage.
– Lawrence Seow, CFP, Head, Financial Planning, VKA Wealth Planners Sdn Bhd
(A Financial Planning Firm Licensed by Securities Commission & Bank Negara Malaysia)
(A Corporate PRS Advisory Firm Licensed by Securities Commision & Federation Of Investment Managers Malaysia)