The path to picking up your keys

When you’re a child, the first time your parents hand you a house key of your own can be a really memorable experience. As an adult, picking up the keys to your first house can be an even more memorable experience. The bad news is that it can be quite a tough slog to get to the point where you can hold those keys in your hand. The good news is that it is possible and a bit of advance planning can get you there. Here are three tips.

Minimize your consumer debt It can be hard to make ends meet, especially for young people, who are not only at the start of their careers but also still getting to grips with basic life skills such as budgeting. Having easy access to credit can, therefore, be very useful, in fact, for some people it may be essential. For example, if you’re self-employed and have limited savings, then your credit card may be your only practical option for managing regular expenses on an irregular income. If this sounds like you, then always make the minimum payments on your credit card in full and on time and aim to pay down your credit balance as much as you can when you do have money, ideally pay it off completely. This will not only help your credit record (which is very important for a number of reasons, including getting a mortgage) but it will also improve the overall state of your finances by lowering the amount of interest you pay. On a similar note, while life is for living and it’s understandable that you will want to make the most of any experiences which come your way, remember that life is a marathon not a sprint. In other words, unless an experience really is “once in a lifetime”, it may be best to postpone it until your finances are in a more robust state, while you focus on improving your ability to make significant life purchases, such as your first house.

Save and invest as much as you can Staying out of debt is a good start but if you really want to own your own home, then you will need a deposit and you will want it to be as big as possible. Ideally, you will treat saving for your first home as one part of your overall financial plan and you may find it very helpful to get professional advice on setting up and implementing this plan. Financial advice can be just as useful when you are at the start of your career, on a relatively low income, as it can later in life. In fact, starting out your adult life on a solid financial footing can be hugely beneficial later on down the line.

Ensure you have the right insurance This may seem like an odd suggestion but the idea is to minimize the likelihood that you will have to divert cash from saving towards your first house to dealing with an unexpected event which life has thrown your way. Essentially, you should aim to ensure anything which really matters to you, be that in a practical sense or in an emotional one (insofar as that is possible), so this includes both tangible assets (such as cars, bicycles or essential work equipment) or intangible assets (such as your income, your health or the health of your pets). The big advantage of having insurance is that relieves you of the responsibility of guessing what your potential liability might be and “self-insuring” and gives you a set liability of the premiums plus any excess. You can then use this knowledge as the basis of an effective budget. Your property may be repossessed if you do not keep up repayments on your mortgage.