Many prospective purchasers are concerned about stretching the budget too thin when buying a home. And if you’re stretched now, what if rates rise? What if you add a child to the mix?

David Johnston, Founder and Managing Director of Property Planning Australia provides some insight regarding managing cash flow and your price point for Daniel Butkovich, the Advice editor for Domain.

One of the four pillars of property planning is managing risk. The best way to manage risk, is to successfully manage money and cash flow. This critical consideration should weave right throughout your mortgage, money and property decisions. The level of risk appropriate for you will depend on your goals, your personal circumstances and your risk profile. There is no ‘one size fits all’ approach!

An important element to a successful strategy is having a strong money management system in place. It’s one thing to buffer yourself from the uncertainties of the future, but if you’re in the habit of spending willy nilly and don’t know where your money is going, you open yourself up to unexpected surprises. When striving to purchase a property, you should start with the end in mind and work backwards. Before you purchase, be clear on your goal financial outcomes for after you purchase. Most people fall into the trap of purchasing and then seeing where the dust lies! Making decisions based on what a lender or mortgage broker tells you that you can borrow – or a buyer’s agent tell you what you should purchase – without clarity on cash flow is a recipe for disaster.

Have you got a risk management strategy in place that will last the test of time?

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