At many gatherings, I’m always asked the same question—hundreds of times! I’d like to buy a house, but the bank didn’t approve my loan… And when I look at the person asking the question, I see that he is middle-aged, just starting a family, has two or three children, and earns an average income of between 12,000 and 18,000 riyals.

Investing to Own a Home for Life

Everyone aspires to own a good home, but the choice must be appropriate and in line with one’s needs, and there must be a solid plan that will positively impact one’s standard of living in the future. Understanding an individual’s current housing needs based on their estimated budget, and striving to improve and enhance one’s living conditions through the right investment to own a home for life within 10 years is possible with good planning and a clear vision of the future.

Budget for the First Ten Years

During the first ten years of marriage—and the few years leading up to it—every purchasing decision has a direct and significant impact on the financial future of the individual and their family. It is perfectly acceptable to live in a three- or four-bedroom apartment that suits your needs and budget by by setting aside one-third of your income; another third should be invested in the financial markets; and the remaining third of your income should be allocated to other living expenses, which should also be appropriate for your current situation and serve your goals and aspirations.

Moving Up the Real Estate Ladder

Therefore, if an individual acquires a small home suitable for their needs and invests one-third of their income in it for ten years, they will see growth in the value of the apartment, whose market value will increase after a short period as real estate values rise overall. In this way, the individual saves on housing rent, the market value of the property (the apartment) will increase, and they will achieve a good return through their investment in the financial markets.

In this way, you will have achieved the concept of moving up the real estate ladder, as well as improving your standard of living, You have used the property you own as an effective investment portfolio and benefited from the rise in its value to then move to a larger home suitable for the next stage of your needs, based on the value of your current home along with the accumulated profits from your investment in the financial markets.

Comprehensive planning to identify needs

While purchasing your dream home at the start of married life consumes 60 percent of an individual’s income, plus 7 percent in annual maintenance costs, this places a cumulative financial burden on the individual over many years—spanning more than 20 years—and leaves them unable to set aside any money to invest.

In both cases, it depends on your understanding of the term “asset,” which is something an individual owns that has a specific material value and generates a return or profit. If an individual owns an asset that consumes all or nearly all of their income over the course of 20 years, that asset becomes a burden, as it does not generate any profits—quite the opposite; Therefore, you must plan comprehensively to identify your needs and obligations before taking any step that affects your standard of living early in life without realizing the consequences of your decision. By following the concept of moving up the real estate ladder, you will achieve financial stability.

*Founder and Chairman of the Board of Directors at View