Post by Erica Minutella
If you’ve been looking to buy a new home, but aren’t sure where to start when it comes to saving for your first big purchase, you might find the tips in our latest interview of use. We talked to John R. Oliver, a personal private wealth manager from Executive Wealth Management, LLC
Erica: Can you start off by telling me about your background in finance?
John: I’m a personal private wealth manager, so basically I work for small business owners, entrepreneurs, families, people that are getting ready to retire. Oftentimes our role is needed at certain points in a person’s life. The-day-to-day work is about meeting new people, and creating new relationships.
Erica: What are some “Budgeting 101” tips you can give to young people looking to save for their first big purchase – like a new home?
John: The first thing should be to get a big picture – write it down. The main thing I do is work in buckets. They’re working on the first bucket right now – the cash flow bucket.
- Write down necessity expenses. Necessity includes car, transportation, utilities.
- And then protection – life insurance policy, car insurance.
- And then pay yourself – I consider that a necessity – at least 5 if not 10 percent. That could keep you from buying a house sooner than you want to but it’s that important.
- And then whatever you’re outgoing debt would be – if you’re paying credit cards for instance – put the minimum down at least.
- Also include an emergency fund. Your emergency fund should be about three to six months of your necessity expenses.
That would be the smallest number that you could live month to month. After that it’s free rain, every dollar past that point – you’ve filled up your bucket. After that it’s investing and or larger purchases in the next two to four years.
Erica: What would you recommend in terms of seeking a loan?
John: It’s up to them, if they want to find one of those loans that’s at three percent, or if they want to go to 10 or 20. I’m a proponent of at least getting 10 percent of what I need to put down on a house. How much is 10 percent of 150,000 dollars, for instance? You can save for that in a number of different ways. You can be really inexpensive and cheap based on your budget and save that in a year. It may take you 3 years.
Erica: Are there additional resources that people can turn to if they’re feeling overwhelmed?
John: Don’t hesitate finding someone to help you. Work with a financial planner, especially when you’re young. I’ll work with a younger professional because in the long-term I know they’re going to be great clients. I like seeing their lives change, like when they get a career promotion which I really love.
But if you do it alone use one of the apps, like EveryDollar, Mint.com. You can use Google Docs or an Excel spreadsheet. If you work with an advisor you might be able to use their apps or software.
Try to automate as much as you can. Auto-paying bills, investments, and savings goals will make the goal happen on time without any emotional changes.
Erica: Is there anything that people should think about when buying a new home, that typically they forget to pay attention to?
John: A lot of times when it comes to purchasing a house they don’t think about the taxes and the location. I have a friend who was looking for a house recently and he was looking in this area and the taxes were $2000, and then another was $5,500. So always take into account taxes when you look for a new home.
Erica: Are there any good online resources that people can turn to for more info?
John: Facebook Groups could be interesting to keep on top of trends and do background research. It’s a free resource. The moderators are pretty good.
There are forums like Reddit and financial forums. Search for forums in your industry. For instance, there’s a financial forum just for doctors that’s really big.
Using Twitter in general is a good resource just to get financial news, and to search things. If you’re a prospective home-buyer, go and follow Zillow and realtor groups and you’ll get a good feel of what’s going on.
Also, investopedia.com, which starts from general finance and advances to in-depth investing strategies.
You can also follow me on LinkedIn and Twitter @agilejro, where I regularly share financial advice and tips!
If you have additional questions on first steps to take when planning for your first home purchase, reach out to Christina Briglia, Realtor anytime at phc.christina@gmail.com or 267.231.5484.