According to a 2018 poll by CIBC, Canadian Millennials are dreaming of becoming homeowners but most aren’t planning for it – 76 per cent haven’t saved enough for more than a quarter of a down payment. And a whopping 60 per cent believe that renting is just as costly as owning a home.
Surprisingly, the poll found that despite higher housing costs, homeowners are saving more each month than renters or those who live at home. In most cases, renters have a bonus opportunity to grow their savings because they don’t have the same monthly costs as homeowners. Yet according to the poll, it appears this isn’t a priority; of the renters and live-at-homers who intend to buy a home, less than half (45 per cent) have created a monthly budget and only 18 per cent have met with a financial expert.
“In the past, buying a home was really the trigger for getting serious about savings,” says Kathleen Woodard, senior vice-president, CIBC.
When someone plans to buy a home, they reduce their spending so that they can save more to help achieve their goal. This can help foster healthy habits and the discipline needed to accumulate savings. Whether you’re looking to rent or buy, it’s a good idea to seek expert advice early on (for example, from a certified financial planner) to help put together the right financial plan for you.
It is possible to own a home
“As Millennials delay the act of saving, they miss out on the opportunity to grow,” says Woodard. “As Millennials are weighing the options to rent or to own, it’s really important that whatever they choose to do, they need to start saving now. They can’t delay.”
Where do you start?
- Crunch the numbers and figure out what you can afford
- Get real and learn whether renting or owning is right for you
- Get a budget together and see where you can trim your financial fat and sock away towards a down payment
- Figure out where you’ll save your down payment – in a bank account, RRSP or TFSA?
- Get a plan – find a certified financial planner who can help you crunch the numbers!