Fear of Missing Out
By Robert A. Mecca, CFP®, MBA
Vice President of Wealth Management
April 20, 2018
Millennials are classified as persons born between 1981 and 1996. Up until recently, millennials were content living in their parent's basement or attic, using Uber and not purchasing or leasing a car, spending on coffee, eating out, and renting.
But now with the economy growing and millennials having good-paying jobs while starting a family, more are seriously looking into buying their own residence as a condo, townhouse, or single dwelling house. They see their friends moving forward with the purchase and develop a FOMO (fear of missing out) attitude.
According to an article in a recent USA Today article and republished in the April 15, 2018 Arizona Republic, a solid 1/3 of millennials see their friends buying a house and think they can, and should, do it also. Many have admitted they are jealous of their friends who are now homeowners. Currently, 36% of adults under age 35 own a home. This is currently the most active generation of home buyers in the U.S.
One in four admit they now need to take fiscal responsibility with home ownership before it is too late. Indeed, interest rates are rising and likely to go higher. In many geographic areas, there is more demand for houses than supply, thus increasing the purchase price. Leaving money in the bank earning about zero and not keeping pace with inflation can be a loser's game. All of these play an important part in prudent financial planning for that huge house purchase.
There are many important factors that go into buying a home. How much house can be afforded? How much down payment is proper? Where will the money come from? What type of financing is appropriate? How does the mortgage and related costs impact cash flow? How should real estate taxes be paid? What type of homeowner insurance is proper? How does the purchase affect income taxes? Should life insurance be reviewed in light of the purchase? How does the home purchase impact other important financial goals such as college costs, debt reduction, retirement, etc.
Buying a house is a major purchase. You need to do your due diligence and homework prior to making the decision. Never be emotionally tied to a house purchase. Making the wrong decision can have severe financial consequences.
Over the decades, we have helped clients with this major decision. Lean on us.
According to Laurel Road survey of 1,000 college educated adults, a huge 54% sadly do not believe they will make enough money to reach their financial goals. There are many avenues to help strive towards your dreams. We are here to help.
Unless otherwise expressly indicated, the opinions or views expressed in this article are the author's own and do not reflect, and may differ from, the opinions or views of Strategic Financial Group, LLC or others within Strategic Financial Group, LLC, including its officers, managers, owners, employees or other service providers.