How Much Life Insurance Do I Need?
The Role Life Insurance Plays in Your Finances The purpose of life insurance is to...
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We talk a lot, here at Wealthtender, about saving money. We’re here to help you save on things like day-to-day spending, eating out, and holiday spending. But what about those major expenses? The once-in-a-lifetime things like college, your wedding, or buying your first home. There are a lot of ways to save on those too. It helps to start not by putting pennies in a jar, or clipping coupons, but by looking at the really big ways that some people overspend on these things. Today we’re considering some ‘big picture’ ways to save on major life expenses.
Pick your major carefully. Research shows that the majority of people still think that going to college is worth the debt they rack up. However, it does depend on the type of degree they study for. The jump in earnings for those who major in hard sciences, versus those who major in liberal arts, is significant. Think carefully about the jobs available in your field and how much extra that college degree will translate to, in terms of salary.
Plan your classes carefully. I know several people who’ve ended up taking more classes (and spending more money) than they actually needed to graduate, simply because of bad planning. Check exactly what you need to do to fulfill the requirements of your degree. Make sure you know if you have credits to carry over from elsewhere. Don’t duplicate requirements. Plan ahead and see how much college credit you can stock up on in high school, though AP or IB classes, or by taking community college classes.
Apply for every scholarship, grant, and bursary you’re eligible for. Yes, researching and applying can be time-consuming, but that’s exactly why some grants and scholarships are less competitive than they should be. Many students simply don’t want to put the time in. This means that some scholarships have very few entries, and some go unclaimed every year. Remember that you can often apply for grants and scholarships all the way through college. Those available for returning students are often less competitive than those only available to those in their freshman year.
Check you can actually afford to buy. You’ll need a deposit, mortgage, and an extra 5% to run your own home. And that’s before you look at the opportunity cost of tying up so much money in a property. People want to get on the property ladder as soon as they can, but there are pros and cons to both renting and buying, and jumping into homeownership too early will potentially put you in more debt than you can comfortably afford, costing you a lot more money over time. Buying at the right time (for you) can save you money and stress. If now is not the right time, you can prioritize aggressively paying down any debt you have, and saving for a bigger deposit.
Spend a ton of time on research. It’s easy to get emotional about buying a home, but it’s a huge expense and it really pays to be logical. There’s no reason you can’t start monitoring property prices, attending open houses, and looking at the house prices in different areas, long before you’re actually ready to buy. Understanding the market, knowing the up-and-coming areas, and appreciating exactly what impacts the market price of a property, will help you find the best deal when the time comes. Monitoring the market will help you pick the right time and market conditions to buy as well.
Shop around for mortgages. There’s a lot to consider when you start looking for a mortgage. Mortgage providers may try and lure you in with a great interest rate, but how long will that last? When will it increase? By how much? Look closely at all mortgage terms. The Federal Trade Commission claims that shopping around, comparing, and negotiating on a mortgage can save you thousands of dollars.
Forget everything you know about weddings. Weddings are something we all have very fixed ideas about. The simplest way to save money is to put all those ideas aside and stay open to doing your wedding as creatively as possible, as long as you and your future spouse are happy with it. This will allow you to consider non-traditional (and cheaper) options when it comes to everything from venues, to rings, to catering and dress code. Ben Le Fort wrote a fascinating piece recently about the impact a $1000 wedding can have on your long-term finances. Some of the best weddings I’ve been to have been when the bride and groom were willing to ditch tradition, consider outside-the-box ideas, and have a truly unique day. Every one of them has cost a fraction of a traditional wedding.
Consider the timing. Wedding season generally runs from May through October, and Saturday is the most popular day to get married. Getting married in the winter, on a weekday, or even on an unpopular date (such as Friday 13th, if you’re brave enough) can save you a lot of money in venue hire and other expenses. Weddings have traditionally been held on a weekend because the whole of society used to work a very 9 to 5, Monday to Friday schedule. In our current, modern, 24/7 society, workers tend to have a much more flexible schedule, and many people often work weekends, so they may well have to book time off for your wedding anyway. For smaller weddings where you know the guests are a little more flexible, weekday weddings can work out a lot cheaper.
Rent don’t buy. This is sound advice in many situations. If you rarely use something, it’s generally much more financially savvy to rent it rather than buy it, and hopefully your wedding is a one-off. Many brides are now choosing to rent their wedding dress, but why not take it further? Tuxedos and bridesmaid dresses can be rented too. You can rent décor for your wedding venue, and even artificial flowers. If the only reason you’re buying a particular one-off item you’ll never use again is to have it as a keepsake of your wedding, consider whether that’s really necessary. You’ll have a ton of photos and happy memories, which is what’s probably most important.
Remember, there are hundreds of small ways to save small amounts on these big expenses. But sometimes with big expenses, looking at the ‘big picture’ first can be the route to saving truly significant amounts.
Disclaimer: The information in this article is not intended to encourage any lifestyle changes without careful consideration and consultation with a qualified professional. This article is for reference purposes only, is generic in nature, is not intended as individual advice and is not financial or legal advice.