Age is a decisive factor in determining our spending habits, attitudes towards money and financial priorities. At different life stages, we are thinking about different things, worried about different issues and focused on achieving different goals. Naturally, this impacts our finances. This month, we’re examining some trends relating to age and financial thinking in connection to home ownership.
In the first of this three part series on life stages and property, we look at how young people are thinking about money and the challenges they face. Consulting a mortgage broker is a great way of helping young property seekers secure a home and achieve their financial goals.
How do young Aussies feel about home ownership?
Whether you are renting or already have a mortgage to pay off, if you’re under 35, housing is your biggest expense. Those who joke about millennials and their expensive brunching habits clearly aren’t aware that housing costs take up on average $278 of their weekly spend – far more than things such as groceries, transport or recreation.
Purchasing property remains a goal for young Aussies, in spite of the general decrease in housing affordability. As we’ve discussed elsewhere, the 2016 Westpac Home Ownership report revealed that the ultimate goal of becoming a home owner one day remains strong.
So, as a young Aussie, owning your own home is evidently something you’d like to achieve one day, and the amount of money you spend on it will take the biggest chunk out of your wallet.
What challenges is the millennial generation facing?
Undoubtedly one of the biggest problems you’re facing at this early stage of adulthood is rising property values that are pricing you out of the market. In spite of wanting to buy your first home, you’re likely to take a lot longer than your parents did to get there.
While your parents started their careers during a period of economic stability, many of your generation have the added challenge of leaving school or university and entering a job market that is uncertain. The GFC didn’t hit Down Under as severely as it impacted other economies, but it certainly did affect job security for many Aussies, who are still reeling from its effects. An ALI study found that job security is a concern for one in three Australians paying off their mortgage. So it’s little wonder that young Aussies are thinking about their employment prospects before getting a home loan.
In addition to high prices and concerns about job security, people aged under 35 are less likely to possess a high level of financial literacy, according to the most recent ANZ Adult Financial Literacy Survey. Of course, millennials haven’t had the decades of experience dealing with financial institutions that older generations have, so this does make sense. Nevertheless, you’ve probably got a little reading up to do!
How can young people address these problems?
One of the most important things you can do as a young property seeker is educate yourself. Stay abreast of what’s happening in the financial world by subscribing to useful magazines such as Money and using helpful online resources and budgeting tools on websites such as MoneySmart.
And, as owning your own home is one of your top financial goals, talking to a mortgage broker is one of the most useful things you can do. It’s free to chat to us, and we can help you find a competitive home loan with all the features you need.
You can contact a Smartline Mortgage Adviser on 13 14 97 for mortgage advice. Or complete our call request form and we’ll call you!