No matter how unique you think you are, we all make the same major purchases in life.
What are these major purchases? Car, home, and wedding. Yes you’ll buy a car eventually (you can’t take the bus forever). Yes you’re likely to buy a home (your parents will kick you out when you’re 30 and bringing dates over). Yes you sexy stud, you’ll be getting married one day (you can’t be single forever, even the man behind Playboy got married).
If you want to save lots of money in your lifetime you need to take the major purchases seriously just by getting ready for them.
Let’s talk about how you can start planning for the major purchases in life so that you can save lots of money. What I’m going to do is break down every section for the three major purchases in life (wedding, car, and home).
Be realistic about the costs involved.
You’re wedding is not going to be a little one. We all want a little one. Very few of us actually do. You can plan an affordable wedding. However, you do need to be realistic that your wedding can easily cost in the tens of thousands of dollars.
Do you want your car to be new or used? This will drastically alter the price of your car purchase. Will you pay for the car upfront or will you finance it? This will also determine how much you spend on your car during its life span.
Will you live in a condo or in a house? Will you live alone or with someone else? How much will you put down for the mortgage payment? There’s actually much more to this and I really don’t want to crush you with analysis paralysis. I’ll just leave it at this– what ever you think a home will cost, add thousands to that.
Start saving up over time.
This one is iffy. If you have a serious partner or are engaged then you’re going to have to save much more money than the single person. If you’re single then yes you too should start saving up for you eventual wedding. You won’t have to save up as much, but it’ll help if you start planning ahead for your wedding.
Since you’re likely to buy a car first you should put the most of your income towards this. If you move to another town or find a job far away the odds are that a ride is the first thing you’re going to need to buy. This is why I would save most of my money for this.
You’re going to want start saving for a new home ASAP. It might take you much longer to buy a home because the cost of a down payment has gone up significantly. The sooner you start, the sooner that you can have a place of your own.
What do you really need at your wedding? Do you need the most expensive hall in town? Can you get married down south? There are many ways to prioritize spending on your wedding. Some will want a modest wedding. Others will want a ceremony filled with bravado.
How important is brand name of a car to you? Do you really need to finance your car? When it comes to your first ride you need to prioritize by deciding what you really need. Some feel that since we only live once we should splurge on a car. Others just want something to get around town. What do you want from a car?
How quickly do you need to buy a home? Many young people feel that buying a home is a natural part of growing up. I’m not sure how this myth got started, but it’s not true. You DON’T have to buy a home if you’re not ready. You can rent until you’re totally comfortable with your career and savings.
By planning for these three major purchases as soon as you graduate from college, you’ll be ahead of your peers. You’ll put yourself in a position where you can save lots of money just because you’re going to be prepared. You won’t have to borrow any money last minute.
Check out the other article in the series:
The Power of Passive Savings.
You Need to Pay Yourself First.
Take Credit For Your Credit.
One Income Just Isn’t Enough to Save Lots of Cash.
(photo credit: chris doelle)