select
|

Be prepared for the unexpected

Owning a home is a long-term commitment that can span a lifetime. While we all hope for the best, it is likely that at some stage during our lives, a home emergency of some kind will strike, so it is best to be prepared.

“Being prepared for the unexpected is part of owning property,” says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa. “While it may be impossible to determine when it will happen, the eventually of something needing to be repaired on a home is a certainty that homeowners need to consider and  prepare for. Putting aside money each month in some kind of contingency fund will provide homeowners with a financial cushion and assist them in avoiding going into debt when a crisis strikes.”
 
He adds that on average the typical buyer of a single-family home will remain in the property for around 13 years – often longer. “I think it is fair to say that a lot can happen over a decade or longer.  Having a plan of action in place will help homeowners to tackle whatever life throws at them and keep going. The goal is to have the means to address the changes or emergencies that occur, without it jeopardising the homeownership or placing the homeowner under severe financial pressure,” says Goslett.
 
According to Goslett, there are emergencies that happen to the house itself, such as roof repairs or rising damp, both of which can be a massive financial expense, and there are the financial emergencies that affect the homeowner, such as job loss. “The question every homeowner should ask is if something like this happens, would I still be in a position to afford the home? For the majority of homeowners, the answer would probably be no, which is why a contingency fund is imperative as a homeowner,” advises Goslett. “While the idea of putting money aside can be a daunting task, especially with the constantly rising cost of living, the consequences of not having a financial cushion to fall back on will be far greater.”
 
Goslett says that in essence there are three basic steps that homeowners need to take to start creating an emergency fund. This will provide them with a safety net that will assist with any obstacles that come their way, regardless if it is something as big as losing their job or as trivial as a leaking toilet.
 
One – Determine the required amount

 
As bare minimum homeowners should aim to save approximately one month’s salary, however, in an ideal situation, six months’ income in saving is preferable. “A six-month financial cushion should see homeowners through most crises that arise. That said, saving up half a year’s worth of income will be no mean feat, it will take a fair amount of time and planning to achieve. Setting smaller goals along the way will ensure that homeowners maintain focus and stay motivated,” says Goslett.
 
Two – Choose a saving vehicle

When wanting to build up a significant amount of savings, selecting the right savings account is crucial for success. Interest rate yields will vary from one account to the next, so it might require some research to find the right product that will yield the greatest return while meeting the criteria. Often the savings accounts with the highest interest rates will require the account holder to lock their money away for a certain fixed period - this could be problematic to a homeowner who requires the money in an emergency.  The interest rate, as well as accessibility,  will be key factors to consider.
 
Three – Automate the savings


Setting up a monthly automatic transfer will make the process far easier and will help homeowners remain disciplined with savings. If predetermined amount of money is transferred into a savings account automatically each month, it takes the decision-making process out of the equation and ensures that a contribution is made towards the contingency fund regularly with very little effort on the homeowner’s part. 
 
“Setting money aside each month is the best way for homeowners to prepare for and deal with an emergency situation without being forced into debt. A contingency fund will help homeowners be ready for the unexpected while building a solid foundation for their financial security and independence,” Goslett concludes.


  Comment on this Article

  Please login to post comments

Post to my facebook wall
  
2000
Characters remaining


    Latest Property News
    • 20 Apr 2018
      Whenever changes in the political ecosystem of a traditional property market create uncertainty, smart investors begin to look elsewhere for new opportunities. Property experts at IP Global have analysed the trends and crunched the numbers to find new markets to explore in Europe and the United States.
    • 20 Apr 2018
      Energy and water self-sufficiency are increasingly important factors in home buyers’ choice of property – especially in Cape Town where the extreme drought of the past few years has made municipal supply costly as well as uncertain.
    • 19 Apr 2018
      During the last decade, rampant development has progressively transformed Cape Town’s property landscape with densification being the order of the day, but there are still one or two hidden gems like Scarborough which have retained their original character, offering an inimitable lifestyle and an attractive investment opportunity.
    • 19 Apr 2018
      The rental market is a cut-throat sector of the real estate market that waits for nobody. According to Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, first-time renters need to be fully prepared before they even start the process of looking for a place to rent in order to avoid the disappointment of losing out on their ideal property.
    • 19 Apr 2018
      Choosing to buy your first home instead of continuing to rent is a big decision that will usually take some time to put into action, but the sooner you can save up a sizeable deposit, the closer you will be to reaching your goal.
    • 18 Apr 2018
      Selling your home is no small task and as you will quickly find out, there are a lot of misconceptions about the process. Gerhard van der Linde, Seeff's MD in Pretoria East lists the top 5 misconceptions when you are selling your home.
    • 18 Apr 2018
      The Cape Town municipality is now installing water-management devices at properties that have been non-compliant with the new level 5 water restrictions and there are talks of fines between R5,000 and R10,000 for households that use too much water.
    • 17 Apr 2018
      The recent interest rate cut has stoked the coals in the first-time buyer’s market. At least for the next two months until the next interest rate announcement, homeowners are guaranteed lower monthly instalments than in the previous quarter. But, is it wise to take out a 100% bond just to enter the property market while interest rates are low?
        
    X
    Subscribe to the MyProperty Newsletter

    Name  
    Last Name  
    Email Address  
    Email Frequency
    select
    X
    Share this Page

       
    For Sale Property
    Rental Property
    More Options
    About
    Connect with us
    FEEDBACK