As people progress from childhood into adulthood, making some essential life decisions becomes vital.
These choices usually depend on finances and adequate planning. For instance, even though more than half of the US population own at least one car at a time, statistics indicate that most of them will own an average of six cars in their lifetime.
Indeed, cars do not come cheap, yet, they are only one of the major purchases you will make. Below are the others you may want to consider.
- Buying a house
On average, a basic three-bedroom house in the United States costs between $200,000 and $300,000. Indeed, it could be higher or lower depending on the state and the neighborhood. Owning a house is a major life achievement, especially because it solidifies the idea of independence and financial accomplishment for most people. Additionally, it eliminates the need to keep renting apartments or homes, which only becomes a cyclical depletion of personal funds. For many people purchasing a house for the first time, this life stage is associated with many emotions.
First of all, there may be excitement, anxiety, confusion, and remorse (after the purchase). According to real estate experts, these emotions are quite normal among first-timers because of the newness of the ‘territory.’ The process includes the home search, getting approved for a mortgage, finding the right property, and moving in. For young couples moving into their first home together, there may be the added stress of finding something conducive for future babies. Getting a custom home builder may pay off at this point.
Again, there is the added bit of turning it into a home after the house purchase. This marks another major financial milestone. The reason is you have a responsibility to furnish it, purchase appliances, carry out renovations to suit personal preferences, etc. In other words, everything you do to turn that property into a habitable space is a major investment you might make in your lifetime. While at it, you will have other annual financial responsibilities as a homeowner.
- New car
Depending on the model and brand you want, a new car can cost you quite a fortune. According to statistics, 64% of generation X and millennials own brand-new vehicles they bought for at least $42,258. The flexibility of monthly payments spread over the years makes it convenient to own cars. Purchasing a car goes beyond being a luxury. Instead, it is necessary to own a vehicle in this current age for convenience and ease of transportation.
In New York, though, most people prefer to take the train or the bus to avoid the inconvenience of long traffic times. However, elsewhere in other states, more people own at least one car to help them move around. Meanwhile, the cost of owning a car goes beyond the purchase price. Maintenance costs, insurance, and several other fees are backed by law. Moreover, after a few years, most Americans change their cars for newer models.
Although people take the precaution of having insurance on their car, it’s not a sure thing that every bump and accident will be covered. This is due to the terms and conditions of the insurance agreement, and many times people have a minimum limit on their claim amount. This means that if the claim is under that limit, it will not be paid out. So if the accident falls outside the terms and conditions of the policy wording, they have to weigh their options up between getting a car accident lawyer to fight their case for them, or they will need to fork out the cash to cover the damages themselves. And even if the insurance does payout the accident amount, they need to have a stash of cash for the excess amounts they need to pay first. Yes, that could mean that you need to dip into your savings, as this is an unpredictable expense, because who can predict an accident?
But sometimes things can escalate after an accident. If you or a loved one is arrested, the court may set a bail amount that needs to be paid for the defendant to be released from jail pending trial. If you don’t have the cash on hand to pay the bail, you may consider using a bail bond. A bond company issues bail bonds and they essentially act as a guarantee to the court that the bail will be paid. In exchange for this guarantee, the bail bond company will charge a fee, typically around 10% of the total bail amount.
While there is the option to sell the previous car and top up the funds to buy another, statistics show that most people prefer to keep two cars. If this is your option, you would have automatically increased the cost of maintaining more than one vehicle.
Hopefully, you can take some measures to avoid falling victim to owning more cars than you can manage. For example, if you have kids and a partner or spouse, it may be advisable to keep two cars for convenience’s sake. If you live alone and are not directly responsible for a young family, having one car may be ideal for your peculiar situation. Additionally, it is usually recommended to buy a fuel-efficient vehicle that helps save up on costs. While you cannot change car ownership’s major investment, you can still control certain elements to help cut back on costs.
- Wedding costs
The average cost range of a wedding held in the United States is $28,000 – $33,000. The nuptial ceremony can take quite a hit on your finances if you fail to plan adequately for it. The cost of rings, the reception, paying for the venue, décor, clothes for the bride and the groom, etc., all factor into the wedding. To avoid overpaying for a wedding, experts recommend having a financial plan. If you get it wrong from the start, you and your partner may lack the foundation to build a financial relationship.
- Investing money in stocks
A few decades ago, the general belief was that stocks were procured by the ultra-rich. Thankfully, today, this belief seems to have lost its prominence. People can now buy stocks at any price range. However, it is usually recommended to part ways with a bigger amount for higher returns. Even when you record losses, your principal amount will still be intact. This is a major life purchase, and if you succeed at it, you will be glad in the future.