Are you financially prepared for each stage of your life? Do you know how you are going to fund various events and aspects of your life such as a wedding or buying a home?
Most people do not think that far ahead financially. However, it is important to always have your finances in order, and knowing how to financially prepare for life milestones can be incredibly beneficial.
Going to College
Once you have graduated from high school, you may decide to go to college. If so, you know that going to college is not a cheap expense. The average cost to attend college in the United States is $35,720 per student per year.
This number can vary based on a handful of factors: whether it is a private or public institution, and if you are going in-state versus out-of-state. Nonetheless, you have a variety of options when it comes to paying for your schooling.
You have several options if you are wondering how you are going to afford your student loans. Prior to applying for schools, you can look into scholarship and grant options. These can pay for a portion or for all of your tuition, for free!
You also have the option to apply and use student loans if you cannot afford to pay out of pocket. There are various loan options so keep that in mind when it comes time to pay them back, as each has its own set of repayment options. You can also pay out of pocket if you start saving enough.
Buying a House
Whether you are a first-time homeowner or looking to move, buying a new house can be quite the cost. Once you become a homeowner you are responsible for a variety of payments such as the mortgage, homeowner’s insurance, property taxes, utilities, and general upkeep of your home.
The average cost to buy a home is around $306,000.This median cost can vary based on a handful of factors, such as the size of the home or location. Knowing where you fall in terms of what you can afford before jumping into the home buying process is crucial.
One way you can financially prepare for buying a home is by improving your credit score. This is because if your credit score is too low when applying for a mortgage, you may not qualify. The better your credit score, the better (and lower!) your interest rate and mortgage payments will be.
You should also start saving and budgeting your money as most lenders require a down payment for most mortgages. There are plenty of ways you can save money such as the 50/30/20 rule, but there’s also the method of passive income. Passive income is something as simple as learning how to invest in stocks and letting your investments do the work for you. That way, when the time comes, your initial investment has grown and can be used as your down payment.
According to data from WeddingWire, the average cost of a wedding in the United States in 2021 is $22,500. While you may not want to spend that much exchanging vows, your partner might, so it is best to be financially prepared.
When it comes to planning a wedding there are many aspects that go into crafting your day and a lot of people that will need to be paid for it. For example, you may have to pay for a wedding license, DJ, venue, food and drink, photographer, and even the attire that you will wear. With this in mind, there are a handful of ways to fund your wedding.
One of the easiest ways to fund your wedding day could be by applying for a loan. This is an option if you do not have the money to pay upfront and can pay it back over time. You might also receive a gift from loved ones who want to help pay for your wedding. While this may not cover all of your expenses, you can factor it into your overall total before applying for a loan.
Just like buying a house, you can budget and save ahead of your wedding to prepare for how much it will cost. Taking the time to save and pay off each expense one by one before your wedding date rolls around can alleviate stress and save you money in the long run.
It should come as no surprise that raising a child can be costly. Based on their age, the price can vary, but typically to raise a child, you can expect to spend $233,610 as a middle-income married couple. This number includes food, shelter, and necessities through raising a child to the age of 17.
One of the best ways to prepare for having children is to create a solid savings account. Having extra money on the side to pay for extracurricular activities, or other various expenses can alleviate some stress that finances can cause.
Assuming that your children want to go to college, they may need financial assistance with that as well. You should consider looking into a 529 plan. A 529 is an investment account that can provide tax benefits when it is used to pay for qualified education expenses. This can help to financially support and prepare your children for college, as well as for when they graduate.
In most cases, young adults do not think much about retirement, and how they will afford to live once they are out of the workforce. However, it is important that you get ahead, and prepare for your future so that you can live in comfort once you stop working.
One of the most common ways you can prepare for retirement is by enrolling in a 401k program if your employer offers one. In most cases, companies will match up to a certain percentage of what you contribute. A 401k will build interest even if you are not contributing monthly, but the more you put in the more you can earn.
No matter how you decide to financially prepare for each milestone, knowing how to do so is the most important part. By having the knowledge, you can then get your finances in order and experience each life milestone to the fullest without the stress of how you are going to pay for it.