In most peoples’ lives, several key stages will shape your long-term future. As a young adult, the first key event is finishing your formal education, ideally with good grades that will help you secure a well-paid job. Studying hard during these years may help shape your career path and open doors for more rewarding career opportunities.
Subsequently, as the years pass, you may find a life partner and wish to make a lifelong commitment to each other by getting married. In time, you may decide to raise a family together, which will involve significant planning and budgeting.
This article focuses on two major purchases in most people’s lives: buying a car and getting on the housing ladder by securing a first home. Information and advice are provided that will help you plan for both of these investments.
Buying a car
Buying a car is a major financial investment. If you plan to purchase a new vehicle, you may need to consider outside finance to afford it. Ideally, you will have saved sufficient funds to buy the car with your own money. However, if you are in suitable employment with enough income to afford to take on credit, it is wise to search online for car loan providers. Compare a range of companies, paying attention to the repayment timescales and the interest rates charged for the credit. Remember that you should be able to pay the monthly repayments without having a severe impact on your finances.
In addition, it is vitally important to factor the cost of car insurance into your total budget for a new vehicle. Depending on your age and years of driving experience, insurance costs can be relatively expensive. Younger drivers may find that they need to allocate a larger amount of their total car budget for car insurance. Contact a range of local auto insurance agents to gain several quotes. Decide on the level of coverage you need for your vehicle and compare the premiums each provider charges. If this is your first vehicle, it may make financial sense to buy a cheaper car and drive for several years, ideally without needing to make an insurance claim. This will help you enjoy lower insurance premiums and afford a better vehicle that is not as expensive to insure in the future.
A first home
A key part of being able to afford a first home is to budget effectively. Start by making a comprehensive list of your total household income and all your monthly outgoings. This will give you an initial idea of the money you will have each month for mortgage repayments. At this point, it is wise to look at ways to reduce your outgoings and cut back on non-essential purchases, giving you more disposable funds to allocate to a first home. You will need to provide a down payment on most first properties, which will typically range between 3% and 20% of the total price of the home. Often, saving for a deposit will take several years, and you may need to set up a dedicated budget so that you can allocate a monthly amount for this fund. Take out a savings account specifically for the deposit fund and transfer a set amount into it each month.
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