There are many big and important decisions to make when you leave childhood behind and finally reach adulthood. You have to determine whether or not you will go to college and what direction to take with your life. But there are many other choices you will make as an adult also. For instance, should you buy a house or start a business first?
Pros and Cons of Homeownership
There are a lot of great reasons to buy a home. A few of them include:
You have your own space to do what you want, when you want. No more noisy neighbors on the other side of the wall.
If the value of your home increases over time, as most due, your home will be worth more as the years pass. Equity built over time could become important if you need additional money in the future.
When rent payments are nearly equal to a house payment owning your own home makes sense. Rather than paying rent and having nothing to show for it you will actually own something over time.
Obviously there are risks to homeownership as well. Here are some of them:
If you buy a home and the bottom falls out of the housing market, you could end up owing more on your mortgage than your home is worth. Or, you could end up overpaying for your home to begin with.
Of course, another issue of owning a home is that your money will be tied up in an asset. If in the future you need a lot of money in a hurry you would not be able to get to it easily.
You must also keep up with maintenance on your home. Some repairs can be expensive which can further drain your finances.
Pros and Cons of Starting a Business
Owning your own business has many great advantages, too. Some to consider are:
No More Boss
Having your own business allows you to make your own decisions. No more boss looking over your shoulder or nitpicking everything you do.
If your business is successful, you have the potential for a great return on your initial investment. Clearly it still takes hard work to achieve financial freedom and success, but it can be done.
You may be able to still purchase a house later after you have made your business a success. This is one way to achieve both goals.
Once you decide to retire you can sell your business and retire on the proceeds. An additional option is to hire a manager and retire off the business income as well.
There are also drawbacks to starting your own business. You should think them over carefully:
Your Business Could Fold
Your business might not be the success you’ve dreamed of. If the worst happens you could end up losing everything you’ve invested and have zero to show for it.
Money Can Be Tight
When you are running a business you sometimes have to pump more money into it before seeing growth and success. That means less money for you and other possible family members to use for living expenses.
Long hours are sometimes necessary to make your business profitable. If you have a family at home or young children it may mean sacrificing some family time which is hard on everyone.
Home ownership is not for everyone but neither is starting a business. Whether you should buy a house or start a business clearly depends on many factors. However, with hard work and good financial decisions you might be able to achieve both.