I wish that it was one of my first aims when I graduated from RMIT back in 1992, but I had other crazy, non-future looking plans. In fact, it was my dad that taught me why it is a good idea to start on saving for a house. He went one step better and gave me a loan to kick the savings off. For me, this gave me some groundings on saving even though I was not aware of the reasons why I was doing it. All I can think of was the my net worth slowly increasing.
Looking back on it, I realise that buying that house gave the following 3 things.
- Financial responsibility - My dad's loan was enough for me to put a deposit down for a modest house which I lived in it for a number of years. However, I was responsible for making the monthly mortgage repayments. My dad made it clear to me that it was my responsibility to make the repayments, and I will bear the consequences if I missed the repayments. For someone in the early 20s, this is quite a big responsibility.
- Created a savings habit - As my savings was forced, it quickly became habit, and a good habit at that. This good habit is something I have today, although I still need to be strong discipline to maintain the habit. (sounds a bit like giving up smoking, doesn't it).
- Understand the value of money - As young 20-something, most of my salary went into mortgage. So my disposable cash is limited. What this means is that I have to be careful on what I spend it on. I can't just splash it out on the latest Playstation games. I have consider the day to day spending. It clearly illustrate the differences between the needs and the wants.
The other thing that I learned when I purchased the first house is that you never stop learning. I want to thank my dad for helping me out here.
photo by James Kurowski