Home ownership is on the decline among millennials. According to an article on the University of Pennsylvania’s Wharton Business School’s website, less than 20% of men and women between the ages of 18 and 34 think of it as a goal within their reach. But last year Latinos defied that trend, driving “the largest one-year spike in more than a decade.” According to David Stevens, president and CEO of Mortgage Bankers Association, “The Latino community is massive, it’s ready to own, and it’s now.”
Our lives are set-up for short-term instant gratification, often ignoring big wins down the line. The fact is, the long-term financial impact of fluctuating rents over several years are hard to detect. As a single mother, I found it difficult to see beyond the demands of each day and struggled to set money aside for such a large purchase. I realized that the sooner I bought my home, the more time I’d have to see my assets grow and eventually start working for me. The payoff came later in the form of tax breaks, insurance discounts, and, most importantly, building equity.
You might think you can’t afford to buy your own home, but the reality is being a homeowner can save you hundreds of thousands of dollars over your lifetime. According to Forbes, it’s estimated to be 20% cheaper to own than it is to rent, ignoring inflation and not accounting for the value of the house itself. Your house becomes your largest asset and is one of the smartest moves you can make for your family’s future. How do you even begin to start saving so much money? One place to research this is in the Allstate Homeowners Guide.
Begin with a goal. First, you have to figure out what you can afford. This will help uncover how much money you will need and how long it will take to save it. Let’s say your goal is to buy a house in five years. Estimate your down payment and divide by five. The result is the amount of money you must save each year to reach your goal.
Decide to adopt a lifestyle of saving. The clock is ticking, so, reduce your expenses starting now. Don’t wait one more day to begin. To meet your goal, you must clear some room in the budget. This means taking a hard look at what you’re spending. Roll up your sleeves and scour your expenses. Cut back on things you don’t need, making it a habit to sock away the savings. Commit to a long-term plan and stick to it.
Increase your income. Take a second job and stash what you make. Next time you get a raise, stick to your budget and add it to the pot. Promise yourself you won’t touch any special compensation such as commissions, bonuses, or even gifts. You can jump start the process of saving money to buy your future home by stashing these windfalls in your down payment fund, chopping years off of your overall savings timeframe.
Consider purchasing permanent life insurance. Whole Life Insurance and Universal Life Insurance protect your loved ones in the event of tragedy, but also build cash value. Like equity in a home, cash value can be borrowed or withdrawn if you ever need it. It’s like having a savings account that provides access to funds at the same time it’s protecting your family. Plus, when you pay back the money, you are actually repaying yourself, not a bank.
Put your savings on autopilot. Set up automatic withdrawals from your paycheck or checking account. Start small and keep adding to it. Can you afford $20 a week? After a year, you will have saved $1,040. Once you’ve adjusted to a comfortable amount, add another $5 or $10. If you expect to receive a tax refund, why give Uncle Sam your money interest-free? Reduce your monthly withholdings and add that amount to what you are stashing away.
Protect your assets. Your homeowners policy may not cover everything, such as floods or earthquakes. It may be worth the added cost of replacement insurance, since damaged or lost possessions are replaced at full value. Make the time for a thorough inventory of your personal property. In addition to helping determine the coverage you need, an inventory helps make the claims process easier if something unfortunate happens. With Allstate’s free Digital Locker app you can store photos, details, and estimated values of your belongings. The app keeps the information safe in case of fire or other calamity and you can update it using your phone or computer.
Owning your own home can change your life for the better. As a financial decision, it’s one of the most important and can be a crucial move toward financial prosperity. Latinos, and especially millennials, there’s no better time to say goodbye to your landlord. Your home is more than where your heart lives—it’s an asset that can provide valuable benefits over your lifetime.
Have you ever wondered how you could contribute to the health and prosperity of your neighborhood? Buying your first home creates stability, not just for you, but for the community as a whole.
This post was written as part of the Allstate Influencer Program and sponsored by Allstate. All opinions are mine. As the nation’s largest publicly held personal lines insurer, Allstate is dedicated not only to protecting what matters most–but to guiding people to live the Good Life, every day.