Living a successful and fulfilling life is an expensive thing to do, mainly because the biggest costs are unavoidable. A college education, a house, a car, a wedding, your utility bills, holidays. They all cost money, and they are all necessities. However, whatever your financial goals are for the year, there are ways to save yourself a bit of money on some of these pricey but essential purchases.
Shutterstock Licensed Photo – By SARAVOOT LENG-IAM
House
Your house is quite possibly the single biggest purchase you will ever make, and saving even a few percent off the total cost will equate to many thousands staying comfortably in your pocket. But how do you save money? Live somewhere smaller? Choose an area that isn’t as nice? These are options, but not the most effective way to make sure that more money stays in your pocket in the long-term. The best way to save money on your most expensive purchase is to build it yourself. If you can physically build it yourself, you’ll save even more money. But simply hiring someone to design and build a house for you on a plot of land you own is much cheaper than buying a similar property in a similar location. Companies like sweetgrass real estate offer plots of land that you can build your own house on. You then use a pre-designed plan, or create your own, and commission the build of your dream home. The cost the land and the build of the home is usually tens of thousands less than the value of the completed property, meaning that just by living there you have made a profit.
Don’t assume that you should pay off your mortgage as soon as possible. You might be able to find an investment with a higher return, which means that opportunity of cost of paying off your loan won’t make it worthwhile. It is a good idea to list the advantages of borrowing money before deciding whether to pay it off early.
Car
Cars are a big purchase, but they are a poor investment. Unless you happen to have bought a classic that will only be appreciating in value, chances are that your pride and joy will be nothing more than a glorified money pit. You might be able to get a loan from a private money lender if you have poor credit, but you don’t want to overpay for it.
Cars are a big purchase, but they are a poor investment. Unless you happen to have bought a classic that will only be appreciating in value, chances are that your pride and joy will be nothing more than a glorified money pit. Buying a new car is possibly the worst thing that you could do for your finances. A brand new car will depreciate by around 10% the moment you drive it off the forecourt. Then after three years of ownership, it will be worth around half of what you paid for it, sometimes even less. Factor in insurance, fuel, servicing, and consumable items like tyres and brake pads with that depreciation, and your brand new car will be costing you tens of thousands in a relatively short amount of time. A three-year old car is not old and worn out, and much of the technology is still very new. It makes good financial sense to save yourself a sizeable chunk of money by buying a car that is at least three to five years old. If you are worried about reliability and repairs, it is incredibly easy to purchase a used car warranty to protect yourself against any mishaps.
Hopefully, this article has helped you to realize just how much money you can save by being a little more savvy with your bigger purchases. It may be slightly more effort, but the rewards are huge.