Let’s be honest: money is tight for most of us, regardless of how much we’re currently pulling in. As a result, we should strive to make the most of each and every penny versus rushing into any major financial commitments.
Unfortunately, some of the biggest budget blunders happen when people don’t do their homework and try to make crucial decisions as quickly as possible.
While you don’t’ necessarily need to be paralyzed by fear when it comes to your finances, you should take special care when it comes to the following major lifestyle milestones and how they might impact your savings account.
Buying a Car
For many, purchasing a vehicle represents the first major investment that they’ve ever made. However, there’s much more to buying a new car than a shiny paint-job. Among the many mistakes first time car buyers make are failing to shop around or going for the first model that caught their eye.
Between getting crucial details on used cars to failing to actually test drive their dream vehicle, make sure to spend some time mulling over your decision to invest in a new ride. After all, deals will come and go: don’t let yourself get stuck with a clunker because you lacked patience.
Buying a Home
Comparing buying a car and a home is like comparing apples and oranges. You obviously can’t test-drive a house, nor can you wait too long when something pops up on the market in your ideal area. Beyond the legalese and paperwork involved with committing to a new home, some essential considerations you need to make include…
- Whether or not you envision yourself staying in the area for the long-term: if you move around a lot or don’t have stable income, buying a home probably isn’t a wise decision
- Hidden costs of insurance and utilities which far exceed what you pay in rent: the mortgage listed on any given property is rarely as low as it claims to be after you include fees
- The state of the home in question: anything that needs repairs or might be a “fixer-up” is often more trouble than it’s worth
Switching Careers
It’s not uncommon to get in a rut career-wise. Nobody should have to work a job that they absolutely loathe forever, but that doesn’t mean you can simply hop from gig to gig with no end in sight. If you’re thinking about switching careers, you should take a long-term approach versus focusing on now.
For example, you need to have a sense of financial security by saving up a nest egg prior to quitting your current position. Ideally, you can line up your new job prior to leaving the one you have now. Also make sure to weigh the pro’s and con’s of your current gig: sometimes the grass isn’t always greener on the other side.
Settling Down
The goals of marriage and children represent the ultimate dream for much of the public, but these commitments cannot be taken lightly from a financial perspective. While you can’t put a price on romance, it never hurts to look at your relationships from a monetary angle. Given that the average cost of raising a child is well over $200,000, there’s no denying the need to have serious conversations with your partner before tying the knot and settling down.
By pumping the breaks and looking at your financial future through a sensible lens, you decrease your likelihood of making rash decisions. Rather than throw caution to the wind, take special care when committing to long-term financial commitments and never dive into something you’re not comfortable with.