There are many financial purchases that can change one's life. And big purchases tend to have the biggest effect. These purchases have their rewards, but they also run the risk of crushing debt and hurting one’s credit score. By taking charge of personal finances early, you can decide whether it’s time to take the leap or avoid making the purchase altogether.
College
The first of the big purchases that have exploded in recent years is on college. The amount of people pursuing higher education has ballooned over the past decade. According to the National Center for Education Statistics, enrollment increased 14 percent between 2005 and 2015. The rise in college attendance has come with a rise in college debt. The average outstanding balance increased 62 percent over the past decade to reach $34,100, according to CNBC. On top of that, about 36 percent of people say they wouldn’t have attended college had they understood the full cost.
College doesn't have to be a mandatory purchase thanks to innovation and technology. To start, there are several places where people can take online college courses free. Coursera works by providing access to lectures and other material at top schools such as the University of Michigan and Yale University. Udacity provides courses in technology and design, including how to make an iOS app.
Technology jobs are growing rapidly, and many websites are popping up to offer chances to learn coding free. Code Academy is one of the most popular websites, as it has lessons in a variety of coding languages such as HTML and Python. Google also launched a new course that teaches people skills for entry-level IT jobs.
Housing
When it comes to big purchases this is quite often the largest! Other than college, housing is one of the biggest financial purchases in one’s life. The Bureau of Labor Statistics found the average American family spent $18,900 on housing in 2016. The average home value is $217,300 according to Zillow, and that price is only expected to rise in the upcoming year.
Many homeowners end up regretting their purchase. A survey of millennials by Bank of the West found 68 percent have some sort of buyer’s remorse, nearly double the number of baby boomers who say they have regrets. Of those with regrets, about one in four says they made poor financial choices when buying their home.
In many cases, renting may be the more practical option. A Trulia study found it’s still 23 percent cheaper for millennials to rent an apartment than buy a home. This is because many millennials can only pay a 10 percent down payment, and there is a chance they may move again after a few years.
Another alternative to buying a house is buying a condominium. Like an apartment, the owner isn’t responsible for exterior maintenance. However, a condo owner can sell their property for a profit in the future. The price depends greatly on the market, so it’s important to buy the condo in the right place at the right time.
Some people are turning to different alternatives, such as buying a “little home.” These homes are expensive to build and have little square footage. But they are easier to tow than a mobile home, they come with standard plumbing and owners pay less for rent at RV parks. Whatever people decide, FinTech helps find the latest technology available for planning a major real estate transaction.
Cars
Transportation is one of the next big expenses in people’s daily lives. The Bureau of Labor Statistics found the average family spent $9,000 on transportation in 2016. Costs include buying a car, yearly maintenance and inspection costs, and the cost of insurance. FinTech Freedom has tips on the types of insurance people should have, as well as which types people should avoid.
It’s easier than ever to get around without owning a vehicle. Depending on where people live, public transportation is one of the most economical and environmentally friendly choices. Another option is riding a bike or using a public bike-share program. In New York, a MetroCard can cost up to $1,000 a year. Using a Citibike in New York only costs $169 a year.
There are car rental services available for people who need a vehicle on occasions. Zipcar is a car-sharing service with locations around the country. People can rent them at about $10 an hour, or become a member and pay about $70 a year. Rideshares such as Uber or Lyft are another option for daily transportation needs.
And, of course, for situations where owning a car is necessary, consider buying a used vehicle with great gas mileage. While many believe selling a vehicle after purchasing it new is easy, that truth is that new cars lose 20 percent of their resale value after being driven off the lot, and 10 percent more over the course of a year. Buying used can save you in the long run, and can often bring you to a car that is just as reliable.
Home appliances
Buying a refrigerator or a new washing machine is a tough pill to swallow after spending money on a new house. Not only are they expensive, but they also run up energy bills.
One alternative to buying a new appliance is buying one that was returned to a major retailer. Another option is buying a used appliance through websites such as Craigslist or NextDoor. There are appliances on those websites that need only minor repairs to run like new again.
Small households can avoid using appliances such as a dishwasher or clothes dryer altogether. Cutting a dishwasher means savings of up to $500 including the initial cost of purchase, and air-drying clothes saves up to $10 a load. Through FinTech, people can figure out their monthly budget and see which appliances to go without.
Life is full of big money decisions and big purchases, and it's up to consumers to understand all of their options. With the help of FinTech Freedom, making those choices is easier than ever.
Lexi Carr is a freelance writer with an interest in financial advice, planning, and travel. Please feel free to contact with any inquiries at lexncarr@gmail.com.