As people grow older, they’re faced with plenty of decisions they have to make on their own. Some of these decisions can change their lives for the better – or when the wrong one is made, worse.
Two of the major, life-changing decisions that people typically face are launching a business or buying a house. If you’re having the dilemma of choosing between homeownership and entrepreneurship, make sure you carefully weigh the pros and cons of each decision.
The Pros of Homeownership
Many view the idea of buying a home as part of the American dream. Individuals who want to bid farewell to renting and decide to purchase a house can enjoy the following advantages:
Stable Monthly Payments
Rents can rise at every yearly lease renewal. On the other hand, you can enjoy paying the same monthly amount for interest and principal until you pay off the loan when the rate of your mortgage is fixed. Although homeowner’s insurance and property taxes can change, they don’t happen as frequently as rent increases.
Freedom to Make Property Changes
Your property, your rules. You can renovate your house to your liking, something that renters don’t enjoy.
An Opportunity to Build Your Credit
Your credit score will rise over time as you maintain regular mortgage payments.
The Cons of Purchasing a Home
If homeownership is ideal, why isn’t everyone on board with this idea? The reason is that buying a home may not be for everyone. Here are a few drawbacks associated with owning a house:
Many associate homeownership with putting down your roots. If you were to receive a job offer to work overseas, for instance, you won’t be able to respond to that easily.
Lots of Homeownership Fees
You’re expected to pay a range of fees as a homeowner. This includes property taxes, utilities and private mortgage insurance.
High Upfront Cost
On top of the conventional 20 percent down payment, you need to save for closing costs, which usually amounts to three to six percent of the total mortgage. Getting the money you need, therefore, may take you some time.
The Benefits of Starting a Business
Another major life decision you could pursue is to say goodbye to the corporate world and use the money you’ve saved to launch a business. Becoming an entrepreneur usually comes with the following perks:
Flexibility and Independence
As the boss, you don’t have to tie yourself to the standard 9 to 5, Monday to Friday work week. As a matter of fact, you can work whenever you want. If you’re productive in the wee hours of the morning, you could start work at 1 a.m.
What’s more, you can work anywhere you want. If traveling is your passion, you could start an online business and live the life of a digital nomad.
The Ability to Choose Your Team
When you’re employed and working within a large team, there’s a chance that you’ll have someone in your group that you won’t like personally. You can’t do much about this, though, unless you quit your job.
This isn’t the case when you’re running a business. You’ll have the choice to handpick your team and surround yourself with competent individuals who will help you drive your business forward.
Better Financial Rewards
Being an entrepreneur allows you to directly reap the benefits of your business’ positive financial performance. You don’t have to wait for bonuses or ask for a promotion or increase from your boss.
The Drawbacks of Launching a Business
Not everything is smooth sailing when you work for yourself. Here are a few possible drawbacks you could face when you’re starting a business:
Long Working Hours
Unlike the traditional and predictable 9 to 5 daily working routine of an employee, having a business means that you may need to work long hours to make your company profitable. If you have a family, this could mean sacrificing some of your time for them to concentrate on your business operations.
Risk of Failure
Many startups fail. You could end up losing everything you’ve invested when your business folds.
Difficult Journey Ahead
Never confuse entrepreneurship with easy. As a business owner, you’ll be facing new challenges every day, such as finding new ways to attract customers and tweaking your products or services for better customer experience. Don’t expect your business journey to be trouble-free and straightforward.
Only You Can Make the Right Decision
When you’re trying to decide between homeownership or entrepreneurship, look at the pros and cons of each decision and get a clear picture of your financial goals, desired lifestyle and available capital. If you need a second opinion, don’t hesitate to approach an expert, such as a financial adviser, who can help you make up your mind.
Whatever decision you arrive at, make sure that it suits your needs and improves your life.