In modern life, all adults need to have sound financial management skills. At present, several notable economic factors are creating a situation where budgeting and smart money sense are more vital than ever. For example, in recent years, across both the developed and developing world, a cost of living crisis is emerging. Wages are not increasing at the same rate as the cost of common goods, and this is putting pressure on many household budgets. In addition, inflation levels remain high worldwide, resulting in increased prices in many different areas. Put simply, the need for all adults to budget effectively from month to month has never been greater.
In addition, certain life situations require a higher level of financial management to enable them to be achieved. This article will discuss two major life events that millions of adults need to budget for – planning for a wedding and purchasing a new car. Advice and information will be provided on how to achieve these life goals while still enjoying a healthy financial outlook.
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Planning for your wedding day
It is estimated that approximately 2 million American couples get married each year. This represents a lifelong commitment to your partner, signifying that you intend to spend the rest of your life together as husband and wife. However, it is important to recognize that preparing for a wedding also involves a significant financial commitment and should be budgeted for effectively.
One of your major plans for the wedding celebrations will likely be to hire an enchanting wedding reception venue. Depending on the location and the number of guests you intend to invite, this can become one of the key costs for any wedding and can often run into thousands of dollars when all fees are considered. It is of paramount importance that you create a wedding budget from the outset of your plans. Start by making a spreadsheet that lists every wedding activity (including the post-wedding honeymoon). As you research and gain estimates from wedding companies, add in the costs of each activity. You will then be able to accurately forecast the total cost of your wedding. If you are over budget, this is the time to investigate other strategies that will lower the cost of your wedding, including reducing guest numbers and asking guests to produce some of the wedding food and snacks.
Buying a new car
Buying a new car is typically considered to be the second most expensive single purchase in most adults’ lifetimes (the first being the purchase of a home). Ideally, you will want to save for such a purchase and buy the vehicle outright, thus avoiding the need to take on extra credit and increase your monthly outgoings. However, if you intend to rely on finance to afford the vehicle, it is vitally important to create a new monthly household budget that demonstrates you can afford to take on the finance. List all your income and your typical monthly expenditure. Remember that a new car purchase should represent a maximum of 20% of your annual income so that you can still afford daily expenditures. Consider a range of finance providers and pay special attention to the interest rates charged, the repayment period, and the total cost of credit.