In a world where FOMO rules it’s hard for millennials to ignore the call of the high life. This can interfere with their ability to qualify for a mortgage, which cuts into your prospective buyers. If you can help teach prospective buyers that keeping on top of finances is a skill best learned early, you can help them meet their goals to own a home. Here are 10 ways you can help young prospective buyers become financially wise!
The easiest way to get control of finances is to have a monthly budget. Have clients add up all their expenses from rent to groceries and entertainment to transportation. They can deduct this from their monthly income to see where they end up. Hopefully, they come out ahead and can put extra money towards savings.
If they break even, they’re on shakier ground so it’s time to start slashing. Show them how they can assess their non-essential spending to find ways to save: no more fancy coffees, no more take out or dining at restaurants, no more fancy clothes or salon appointments, no more booze. If they’re spending more than they’re earning, it’s time to make serious changes. Explain how stopping ALL non-essential spending will help them get into a position where they can start saving.
Credit cards should only serve three purposes:
Let them know their credit card isn’t a free ticket to extend spending. Explain they should use credit cards monthly for purchases and pay it off right away. If they can’t pay cash for something, don’t buy it!
If they have balances on their credit cards, or if they’re still carrying their student loan, suggest a debt payment strategy. They should control their spending, focusing on their needs. Then, put all the extra money they have towards paying off their credit card balances. They’ll be closer to financial freedom by doing so as all that interest they’ve been paying will go towards savings instead.
As they see their savings grow, they can look for investment opportunities. The simplest starting point is contributions to their 401K. This is even better if their employer helps out with contributions.
Since they’ll have more spare time because they’re home spending less, suggest they put that time to good use. Explore the opportunities available for part-time work to bring in more cash.
If unexpected windfalls come their way like bonuses at work, tips or tax refunds, the extra cash should not be viewed as an opportunity to spend. Instead, advise they bank the money or invest it.
Using auto payments where possible, keeps the money going where it should and stops overspending.
Getting a raise or nailing that higher paying job is not an excuse to spend more. If they get more money every month, they should put the extra money towards savings and investment.
Wherever they’re forking out payments for things like insurance, phones, credit cards, etc. chances are they can find a better rate. Have them shop around so they’re getting the best deals.
Although you might not fancy yourself a financial advisor, these basic tips will help prospective buyers get their finances in order so they can work towards owning a home.
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