Rose Miller, grants manager at the JN Foundation.
Many young people will admit that the question of whether one should first secure a house, before thinking about purchasing a car has, at some point, crossed their minds.
Rose Miller, grants manager at the JN Foundation, noted that this is a question which usually elicits strong and passionate discussions during her empowerment seminars across the country.
“This is a common concern and a question I receive all the time, from both young and older persons. There are many schools of thought and opinions on the matter.”
However, Mrs Miller explained that the answer isn’t as simple, or as straightforward, as many would hope. “And, there are really no right or wrong answers to the question. Need, ability and opportunity would be some key motivators,” she maintained.
Mrs Miller, who is also head of the JN BeWi$e financial empowerment programme, noted that many people will admit to purchasing the car first, because it’s more affordable, therefore, saving for the down payment is easier.
“As young people focus on their goals; their decisions shouldn’t be based on what is easiest. “The watch words must be ‘priority and necessity.’ Not what is ‘cheaper’ or more ‘fashionable’,” she advised.
Mrs Miller noted that when it comes to the priorities of a young university graduate or any young person, there are several pursuits that should come before the house or car.
“Are there any educational goals you would like to attain? Did you leave school with proper certification or with the grades you really wanted? Those are questions to consider,” she advised. “If you didn’t graduate with requisite, competitive or marketable qualifications, then continuing your education should be a key focus.”
The JN BeWi$e Head advised young people that their first goal is to think about how they can improve themselves to be able to advance their careers, as this will help them to build a solid financial foundation.
“Now, if you left school with proper qualifications, then your priority, at this point, would be to ensure you settle any outstanding debt used to acquire this training,” Mrs Miller said. “This will help you to build a good credit rating, which will come in handy when it’s time to secure the loan for a car or a mortgage for a home.”
She noted that, as it pertains to purchasing a motor car, there are several things young people must consider.
“For example, do you need it for your job? There are some jobs, such as sales representatives, that require a reliable motor vehicle to effectively carry out work functions. In other words, is the car necessary to earn your income?”
The JN advisor stated that another consideration should be whether the motor vehicle will help the individual to acquire additional wealth. “Can you use this car to facilitate an entrepreneurial venture utilising a skill or even tap into rental opportunities? The unit will then be more of an asset: fuelling your journey to financial independence rather than a liability, which is in effect a hindrance to that journey.”
She explained that while she understands the pressures of public transportation, this should not be the only factor influencing their decision to purchase a car.
In respect of purchasing a house, Mrs Miller noted that homeownership should always be a goal. However, she pointed out that it doesn’t have to be at the top of the list for young university graduates during the first few years of their financial development.
“At this point, your goal should be to create a solid financial platform on which you can build everything else, this should include an emergency fund, consisting of at least six months living expenses,” she outlined.
She also advised young people that, if possible, they should consider living at home with their parents for a few years, while building their wealth. “If you have saved enough for the down payment on a house and, are in a position to comfortably make the monthly payments, then a house could also be seen as a means to gain additional income.”
“However, if you are renting, then assess how much you are paying for rent and whether that money could be better put towards a mortgage. Also, you could reduce your cost for rent, by sharing an apartment with roommates, and save the deposit to purchase a house.”
Mrs Miller noted that saving towards purchasing a house is a priority that young people should always have on their radar, even if they are not ready to make the purchase.
“Home-ownership is of great economic and social value; and, a house and real estate in general, has over time proven to be a solid investment,” she advised.