Social media spreads bad news and alarming headlines faster than the sensationalist newspapers of the past. Competition in the media world is intense with some forms fighting for their lives amid an ever-expanding range of electronic information sources chasing an audience.
What gets our attention fastest? Bad news, alarming headlines, doom and gloom. We are hard-wired to watch out for threats as first priority. Only when we feel safe do we consider good news and positive prospects.
This means we quickly learn what is expected to go wrong and what can’t be done – like buying a first home. How can we ever save enough deposit? Even if we do, how on earth will we afford the repayments with interest rates so high? And there’s a recession coming.
To get ahead financially the first thing young people need to do is ignore most of the negative information we are deluged with daily. Things can be done. Set a goal, make a plan, perhaps with help from an experienced person, and stick to it, ignoring the naysayers.
Young people should first get some training in a field that interests them, then find a job with regular pay. The next crucial step is to form the habit of spending less than they earn. Put an amount aside every payday in a separate account and start saving.
It doesn’t have to be a big amount but it needs to happen regularly. Once a few thousand is saved, a transfer to a managed fund savings plan should earn higher returns, building a home deposit faster. Keep learning on the job and look for promotion opportunities and pay rises.
The First Home Super Saver Scheme (FHSSS) allows people who haven’t owned a home before to put up to $15,000 into their super account each year and claim a tax deduction for it. For those in the second tax bracket, most people, that should give a tax refund of $5,175.
When they wish to buy their first home, they can draw out 85 per cent of the super contribution for the deposit. On $15,000 that is $12,750. Add the tax refund and $15,000 has been turned into $17,975, almost a 20 per cent boost.
The managed fund savings can be boosted in this way. Up to $50,000 can be contributed to super via the FHSSS over multiple years. Parents and grandparents may be able to help. Most parents would like to assist their children into their own home.
The First Home Guarantee Scheme allows most borrowers to purchase a home with just 5 per cent deposit, without paying mortgage insurance. First home buyers are also exempt from State Government Stamp Duty.
So it is possible to buy a first home. Set a goal, take a positive approach, and do it.