Picture this: A young man in his mid 20’s, wearing a GAP t-shirt and Levi’s jeans, walks into Starbucks and orders a mocha frappucino. He scrolls through his Facebook page on a brand new iPhone 6 while waiting for his drink to be prepared. 3 minutes later, drink in hand, he heads outside where his Toyota Altis is parked, gets into the driver’s seat and drives away.
It’s the typical image of a working (or even college-going) young adult these days, where branded clothing, expensive new gadgets, fancy rides, and ‘the good life’ are status symbols of the native millennial. Yes, there’s a special name for them, these young men and women in their 20’s who are the latest generation to join the workforce.
This article got me thinking about how millennials can hardly afford to pay the down payment for a home, let alone buy property of their own. Flashy belongings and glittering outlooks are not cheap to come by, especially when subject to close scrutiny by their peers and on social media. With such emphasis placed on one’s possessions and image, one wonders if their incomes are able to keep up with their hedonistic lifestyle, let alone the huge step and responsibility of buying a home to call their own.
Most university graduates’ monthly salary barely start at RM2,500 even with a degree, and providing they save an average of RM800 every month, with basic expenses like food, rental, car loans, petrol, and phone bills amounting to almost RM1,500, it’s a wonder they still have leftover cash for other things.
In the Klang Valley, prices for residential properties barely go for less than RM300,000, which equals upwards of RM30,000 (or 10%) down payment. With regular savings, one can probably save up to pay for a house down payment in 3-4 years. The problem is that, with property prices increasing by the year, the amount saved up will not be sufficient to cover the initial down payment when purchasing property in later years.
So what happens next? Many result in borrowing money to pay for down payments. Real estate agents say it is common for young adults these days to borrow money from their parents, or take out personal loans from banks, while some even use credit cards to pay for part of the down payment. It is a worrying trend, especially because these millennials have no (or less) qualms about living on credit compared to their predecessors.
The lack of a ‘trade-up’ mentality among the millennial generation is a cause for concern among the older generation, who realized that starting small and slowly building up to bigger and better things was the way to go. Nowadays, it’s all about “Go big or go home” and #YOLO (short for You Only Live Once), prompting young people to either get the best, or don’t get it at all. This extends not only to personal belongings like clothes and electronic gadgets, but also big-ticket items such as cars and property.
Unfortunately, lack of funds is usually the main factor when it comes to buying property for the millennial generation, who struggle to pay even the down payment for a home after several years of working. This can be traced back to increasing property prices, high interest rates, difficulty in obtaining loans, underpaid jobs, and high cost of living in urban areas. Nevertheless, there are still ways to save and earn money while keeping the dream of owning your dream home in sight.
- Every month when your paycheck comes in, the first thing is to take out a fixed amount (e.g. RM 1000) and put it in a separate account just for savings. This way, you’ll be forced to juggle your expenses with the remaining amount instead of dipping into the stash when funds get low.
- Put your savings in a fixed deposit account. The interest may be minimal, but it does double duty by giving you a little extra, while making sure you don’t touch any of it.
- Cut down on unnecessary purchases. You’ll find that you can save so much more by curbing impulse shopping purchases, opting for a coffee shop kopi peng instead of a Starbucks latte, and cooking your own meals a few days a week instead of eating out every day. The latter is especially beneficial to your health, and cooking skills are sure to add points to your personal charm regardless of gender.
- Start a small business based on your hobbies or skills. If you’re good at handicrafts, sell hand-made greeting cards or jewelry. Love shopping and have a good eye at spotting deals? Offer your services as a personal shopper.
- Getting a part-time job may sound tiring, but it’s a good way to earn some extra cash and contribute to your savings. Give music lessons on the weekends, or put your writing skills to good use as a part time copywriter or proofreader.
- Sell off your unwanted or unused items to earn some money and clear items in your storage. With so many Facebook pages and mobile apps specifically for selling pre-loved and unused items, getting rid of that too-small dress could mean the perfect outfit for somebody else, and cutting your losses of that impulse purchase.
Remember, as the Malay saying goes, sikit-sikit, lama-lama jadi bukit, with small amounts of consistent savings, over time it will become a lot!