Tucson Association of REALTORS® - Consumer Jungle Essay Contest - Fall 2012 Winner – LeAnn Lyons – Santa Rita High School
When you hear “Financial Success,” what do you think of? I think of a nice house, a good car, a savings account, some spending money, and for later, some retirement money. Now, I bet we all want that, but the question is, “how do we achieve that?” Well, first of all, explaining Financial Success is just a complete bore. So, how can we understand it better? If you think about it, achieving Financial Success is like baking a cake; you have a bottom layer, a top layer, and a little icing on top.
For your bottom layer, you need budget and some savings. You must have a short term savings goal, and a long term or retirement goal. You will need to start with what your income is and look at what your expenses are. To achieve financial success, you first need to be sure your expenses are less than your income. A good idea for a spending plan would include using the 70-20-10 rules which is (70% - bills etc., 20% - savings, and 10% - investments.) Also, what you want to do is separate your wants and needs, “What do you really need?” and “What can you live without?”” The last thing you would want to do is spend more than what you have because that will just end in a Financial Fall.
For your second layer, you need good credit. In the beginning, you need to start out small like getting a credit card. By using it minimally and paying your minimum payment on time you will gain good credit. Then, as time goes on, and as you continue to pay it off, your credit increases. Once your credit improves in time, you may get a car loan. Paying your car loan will soon improve your credit even more. Eventually, as your credit history improves and saving some money for a down payment you will be able to get a home loan.
Lastly, renting and owning a home are options that you will need to consider for housing needs. In the beginning you’re going to have to rent because you will not have enough credit or down payment to buy a home yet. Although you won’t own it, but you still will be paying for living in either a house or an apartment. Also, when you’re searching for a place to rent, you’re going to want somewhere safe and clean, but something you can afford and not paying too much for a place you don’t own. Once you are financially capable and mature enough, the icing on top of the cake would be home ownership. You also will need enough money for the down payment and associated costs involved to purchase a home as well as established credit to qualify for a loan needed for such a purchase.