During most people’s lifetime, we believe that there are six areas of spending which contribute to an adult’s major life expenses. The six areas are home, car, marriage, children, education, and retirement.
Naturally, most people want a home of their own. Some go to great lengths – sometimes putting themselves in compromising positions – to live in a “dream home”. When purchasing a house, be sure to consider how much you can comfortably afford. According to Forbes, and studies made by other independent bodies, people should strive to buy a house with a purchase price of no more than 3x their annual household income. Briefly, the cost of a home includes more than the monthly mortgage payments alone. The payments generally consist of property tax, insurance, upkeep, etc. Therefore, it would be good to consider a mortgage that will not be overwhelming. Similarly, most people can comfortably manage an automobile that takes up a very small percentage of their annual salary. On average, cars have supplementary costs, which include but are not limited to insurance, gas, parking, maintenance, etc. So, to lighten the budgetary load, it would be good to ensure that our total transportation costs are much lower than our annual income. (Related: The Taboo “F” Word)
“Getting old is inevitable. Therefore, to ensure that our years of maturity are also enjoyed in freedom and comfort, it would be advised for young people to start planning as early as possible.”
Aside from homes and cars, a wedding can be costly. In fact, most people overlook the fact that wedding festivities come with a price-tag that sometimes adds up. According to Wedding Wire, the average wedding expenditure is around $25,000. To keep wedding costs down, we encourage people to spend on the necessities, within reasons – while having a few non-negotiable treats – to have an enjoyable wedding that doesn’t break the bank. Weddings and honeymoons are usually the precursors to kids. (Related: Making Practical Decisions)
Most parents would agree that kids, though a blessing, are expensive. That’s just how life works. Studies from MoneySense and reports from GlobalNews have shown that most parents spend about $200,000 to raise their children from the time they’re in diapers to when they become eighteen. Though life is unpredictable, planning for children, and establishing a budget for spending and savings can help parents keep a healthy financial balance during the child-rearing years. (Related: Savings Cost on Recreational Activities)
In today’s age of modern education and alternative learning, traditional schooling has certainly lost some of its appeal. Regardless of the kind of education we choose to pursue, it is advised to not take on more in total education debt than our future average annual earnings. Finally, after the house, the car, the wedding, and the kids, the usual afterthought is retirement. Getting old is inevitable. Therefore, to ensure that our years of maturity are also enjoyed in freedom and comfort, it would be advised for young people to start planning as early as possible. There are strategies available to take advantage of time and health, particularly in our early years, in order to supplement financially strong retirements. Bottom line: Expenses are inevitable in life. That being said, early planning, discipline, and professional advice are sure to help us navigate through the six most costly expense of adulthood. (Related: Invisible Essentials)
Don’t forget to leave a comment / review below!