One of the best ways of acquiring both wealth and security is purchasing real estate. Parents have practical concerns about the welfare of their children from the time they were infants until their college age.
It is the parents’ job to teach their children how to survive in our society, to have a good education and hopefully guiding them how to financially take care of themselves as the children move on to adulthood. Having a summer job and opening a bank account has been the standard ways that children teach financial responsibility. However, these tasks do not have enough of a real life experience that helps children to sustain themselves throughout their lives.
Some parents have been more proactive concerning their children’s financial security. They have concluded that one of the best ways to give their children financial security is through the acquisition and maintenance of their homes. Thus, their children will have a more realistic view on how to build and maintain wealth.
Wealth building starts when you have control over debt. It is recommended that if parents want to deal with the expenses of college, it is wise to purchase a fifteen-year mortgage when the children are very young. Thus, the mortgage is paid off just in time for their children to start college.
The parents help their children understand the basic concept of economics. They would be given the knowledge that someday their childhood home would be owned by them, and they are not just helping their parents to keep the house in a stable environment.
The parents can introduce to their children the basic concepts of both buying and maintaining a home. They are also introduced to the concept of “sweat equity” in that maintaining the home in good repair is one way of paying for their college education.
Children learn that their home will grow in value and that they must spend time waiting. Therefore, they realize that delaying gratification will lead to the opportunity of paying for their college.
As the children start seeing their home as a financial investment, this is a good time to introduce them to the general concept of real estate. A child that sees their parents’ home as more than a place to sleep and sees a relationship between the value of money and working hard to obtain their dreams. The child learns about the costs and benefits of home ownership.
If the parents have the ability to do so, they could buy their children a home (condominium), as they prepare to start college. Many parents considered investing in a home for their children in the same place they attend college. This practice has many benefits.
After the young adult has graduated from college, their home can be sold, for a profit. The high price of board is paid, which is in the thousands of dollars throughout their college career. The advantages of home ownership are evident. Your child is only in their twenties and has the full-time responsibility to take care of their home and their educational responsibilities. As a homeowner, your children would be making repairs and even be renting their home during the summer months.
Teaching your children the fundamentals of building wealth through real estate provides for your children’s long-term emotional and financial security.