Welcome to Good Money Vibes, the podcast where millennial women in the UK transform from being bad with money to becoming financial rockstars. Are you tired of feeling lost in the world of personal finance? Do you ever think, “I’m just not good with money?” Well, fear not. You’re in the right place.
Every Thursday, we dive into the heart of money matters tailored just for you. Good Money Vibes isn’t your typical finance podcast. It’s a friendly and conversational journey into the world of money, mindset, intentional spending, behavioral finance, and all things money education. I believe that being smart with money doesn’t have to be dull. It’s about understanding your financial behaviors, making purposeful decisions, and most importantly, feeling good about where your money is going. The episodes are packed with practical tips, expert insights, and relatable stories, all designed to empower you to take charge of your financial life with confidence and joy. Whether you’re sorting out your savings, tackling debt, or just curious about how to make your money work for you, Good Money Vibes is your go-to guide.
We’re not just a podcast; we’re a community. After tuning in, don’t forget to join our Money Confidence Club on Facebook. It’s a space filled with supportive women just like you, all on their journey to financial freedom. So grab a cuppa, hit play, and let’s turn those money woes into money wins. Welcome to Good Money Vibes, where good money management meets great life choices.
Hello hello and welcome to another episode of Good Money Vibes. I’m so glad to have you here. Welcome. I took another unintentional break, so yeah, sorry about that, but I’m back. This week, I’m going to be talking to you about home buying versus renting. Oh yes, we’re getting into that big old debate. Despite being a relatively new homeowner myself, I’m actually really torn as to which side I’m on. Like most of us, I always thought that home buying is the answer, the big goal that we work towards, right? But now that I’m here, I’m not so sure. Was it all it was cracked up to be? Especially if you’re buying your first home.
Most people buying their first home don’t have a huge deposit. They often buy homes that need some work. We’re not getting the really nice homes that have been looked after because we don’t have the budget for that. Maybe you do, maybe you’ve got loads and can go for that, but we didn’t. So, let’s actually have some structure to this episode. I want to talk about that first point: most of us think of home buying as something we should be doing because that’s what we’ve been taught.
I don’t know if you’ve listened to the first ever episode I published on this podcast, but it was called “Uncover Your Money Story.” It’s about our money mindset, our unique thoughts and beliefs around money, generated from our upbringing. Everything we’ve seen our parents do, everything they’ve said about money, everything we’ve seen in the media, everything we’ve been taught in school, and everything we’ve experienced about money has made us who we are today and why we believe what we do about money.
Of course, we can unpick these beliefs. We can bring awareness to the things we don’t like and work to change them. That is part of my job as a money coach: to help people build healthier relationships with money and achieve their savings goals. But one big thing, especially for my generation – I am a millennial, on the younger end – is that we were taught that home buying is the big goal.
I don’t even know who told me this. I think it was society as a whole because I look back and realize that I grew up in a council estate. Neither my mom nor my dad were homeowners. My wider family were homeowners, like my grandparents and my aunt on my mom’s side, but not my dad’s side. They were big old family renters. So, I grew up thinking, “I’m never going to be able to afford a house. Homeownership is not something I can achieve.” However, I still opened a Help to Buy ISA. I still had it in my head that it’s something I should be doing.
So, I compared my spending ability and opened this Help to Buy ISA, but for some reason, I couldn’t build savings. I would put money into it and then need to dip into it. I didn’t realize at the time, but I just thought I was bad with money. In actual fact, I didn’t believe in the goal I’d set. I didn’t believe that homeownership was possible for me. Therefore, I didn’t actually work to achieve that goal. It was all going on in the subconscious. My conscious brain was only aware that all my friends were buying houses and I was still struggling with savings.
This might be a lesson for many of you. If you’re trying to save for a home but can’t seem to build savings, it might be because you don’t truly believe in that goal. Think about it. Why do the older generations tell us that homeownership is the way to go? It made sense in their financial landscape. I’m going to take a quick break to find some statistics about the cost of homeownership then versus now. I’ll be right back.
Okay, I’m back with some research. According to Today’s Conveyancer UK and a study from the House Buyers Bureau, the affordability of buying a property today is less than half of what it was in the 1990s. House prices now sit at 8.8 times the average earnings. Today, we face an average house price of around £286,000 while earning on average £32,000. House prices have risen 318% since the 1970s, while earnings have risen by 94%. This means 8.8 times the average income is required to buy the average home compared to 4.1 times the average income in the 1970s. Although the average home was more affordable back then, average earnings were also far lower, adjusted for inflation.
Affordability was even better in the 1990s, with house prices being just four times the average wage. Our parents, likely buying in the 1990s, had it pretty good. Their home price was four times the average wage. So, while they did scrimp and save, the financial landscape was different. They weren’t paying for things like mobile phones and internet, which are necessities today.
Now, let’s talk about renting. Often in the home buying debate, renting is seen negatively, but we need to consider its pros. The number one reason people don’t want to rent is security. Renting someone else’s home feels less secure. However, there are protections in place. Many people don’t realize that when their 12-month contract is up, they can remain in the property on a rolling contract. Landlords need to follow certain procedures to evict tenants, like providing a valid section 21 notice. Even then, tenants can fight their case in court, which can take weeks or months.
Another concern is rent increases. However, these are usually annual and must follow certain procedures. Some contracts limit the percentage increase. Mortgages can also increase, especially if they are variable or short-term fixed rates. We’ve seen interest rates rise, causing mortgage payments to increase significantly.
Owning a home means you can decorate and make changes, but there are limitations. You might face issues with neighbors or unexpected costs for repairs and maintenance. Renting offers flexibility and freedom to move for job opportunities or other reasons.
If home buying is a big goal for you, ask yourself whose goal it is. Is it yours, your parents’, or society’s? Does it make sense for your needs and wants in the next 5 to 10 years? Can you afford the ongoing costs of homeownership, like repairs and maintenance?
When we bought our home last November, we got a two-year fixed-rate mortgage, thinking it would be better once our child was in nursery. But it means we need to stay in this property for a few years to build equity. If something happens with my partner’s job or we want to move closer to family, we’re less flexible.
Reflect on whether home buying is right for you now or if it’s something you’ve been taught to do. Ensure you have a robust emergency fund to cover unexpected expenses.
Renting has its benefits. You can ask landlords about customizing the home, and there are renter-friendly options like vinyl and peel-and-stick wallpaper. Build a good relationship with your landlord and discuss your long-term plans.
If you’re struggling to build savings for a home, consider working with a money coach. I help people build healthier relationships with money, achieve savings goals, and pay off debt. Many clients see significant improvements in their financial situation.
For those who prefer renting, know that it offers flexibility and certain securities. If home buying is a goal, ensure it aligns with your personal needs and circumstances.
I hope this episode has been useful. I love discussing this debate. Feel free to reach out if you have any questions or topics you’d like me to cover. If you’re interested in working with me, I currently have space for three women in my Joyful Money Journey program, a three-month money coaching program. Later this summer, I’ll launch a wealth-building program for those ready to invest in the stock market, property, pensions, and more.
Thank you for listening, and I’ll speak to you soon.
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