Financial tips for recent graduates

After completing the years of schooling it takes to get a diploma, and a job, many recent graduates fall into a heavy spending pattern, simply because they have never been able to do so previously. However, in an age of rising home prices, it has never been more important to start out on a well-planned financial track. This article from the Financial Post provides helpful tips for recent graduates.

The most recently released national average home price sits at $353,147, according to the Canadian Real Estate Association. With recent mortgage regulation changes, if an applicant wishes to amortize their mortgage over more than 25 years, a down payment of 20% or more (almost $71,000) must be accumulated. This combined with the other benefits of a larger down payment, such as paying less overall interest on your mortgage, make saving early vitally important. Making a detailed budget should be the first step in the process, as budgeting is often new territory for those just starting out in the work force. The article also suggests researching how to get the best possible return on accumulated savings, as not all savings accounts are created equal.

Saving for a down payment may seem like a daunting task, but the long-term benefits are well worth the time and effort involved. For more information on purchasing a first home, contact a qualified Mortgage Broker.

Click here for the full article from the Financial Post.

Buy now, save later

For first time homebuyers, trying to save for a down payment and retirement simultaneously is a difficult task. Additionally, suggestions for what percentage of your income should be going towards each are constantly streaming in. This article from Moneysense acknowledges that each financial situation is unique, therefore, saving and spending strategies must be customised, just like household budgets.

One suggestion explored in this article is brought forward by Malcolm Hamilton, from Mercer, a human resources company. His strategy suggests putting 20% of your income towards the mortgage until it is paid in full, then applying that 20% to an RRSP. This method seems to be a workable option for most Canadians in their 20s and 30s, as purchasing a home is top priority.

Of course, when adopting the 20% strategy, there are several factors to consider. The strategy is based on an average Canadian income, and those with higher or lower incomes should adjust accordingly. Those with student loans and those who are part of a workplace pension program should take these factors into account.

Finally, taking on a saving strategy of this sort requires discipline. It is reported that although many Canadians are extremely focused when it comes to paying down debt, they don't necessarily apply the same standard to saving. It can be tempting to use that suddenly available 20% for other purposes. The article also stresses the importance of creating an emergency fund. For advice tailored to your specific financial situation, contact a qualified Mortgage Broker.

For the full article from Moneysense, click here.