Thursday, February 6, 2020

Things you will most likely have to spend on as you approach adulthood

When many of us graduated school and getting ready to become young adults many of us are still not ready for the real world because we were not taught important lessons such as paying rent, how to buy insurance, how to build credit score, how to buy a car, how to finance a car, or a house and how to effectively manage our finance. Many schools don't teach us this kind of skill because they believe that it is the parent's responsibility to teach their kids how to manage money but the truth is not every parent has the time to do that and by the time we knew about it, it will be too late. Today I am going to show you some of the things you should know whether you are still in school or already graduated.

1. When you became an adult many of you will probably want to move out of your parent's house. But before you think about moving out of your parent house you will need to know that moving out means you will have to pay your own rent and utility bill. That means you will need to get a decent paying job and need to know how to effectively manage your finance because by the time rent payment is due and you do not have enough money to cover the rent, the property owner can easily bring you to court.

If you are thinking about owning a house someday you will want to know that owning a house required paying property taxes plus the value of the house you owed. So for example, if you buy a house that is worth 200,000 dollars you might be paying around 1000-2000 dollars in property tax each year depending on where the house is located. You will also need to pay for your property insurance, electricity, water, and waste and these things can add up fast. Property tax, utility and house maintenance don't stop even after you have paid off the house.

2. If you want to own a car, you will need to pay for auto insurance to drive the car, which means there is a bill every month. On top of that, there is also gas you will have to pay to keep your car running. The more you drive the more you will have to spend on gasoline. An average person living in a low living cost state like Michigan spends about 20-30 dollars a week in gas and if you live in a different state with a higher cost of living it could be more.

3. If you live in an apartment the only utility you have to worry about is electricity because most apartments will include water, waste, and gas into the cost of the rent. If you live in a house, you will most likely have to pay for all of them.

4. Internet and cellphone. Since we live in an information era, the Internet and cellphone have become part of our lives. We need them to apply for a job, work remotely and sometimes even for entertainment. However, once you left your parent's house, you will need to start paying for your own.

5. Pay for your own food. If you are planning to move out of your parent's house, chances are you will have to pay for your own meal because your mom will not be there to cook for you. If you want to save money you will have to learn to cook yourself and if you are lazy or cannot find the time to cook, be prepared to spend a lot of money eating out, which can also lead to an unhealthy lifestyle.

6. Car maintenance. This is a big problem for many young adults because once they got a job, they start to think they can spend on whatever they want and then one day their car broke down and they took it to a repair shop, the repair shop sent them a large bill and they cannot pay to get their car fix because they did not bother to save any money for emergency situation so now they are stuck without a car to get to work. Some will decide to take out a loan or use a credit card to pay for the repair. However, since they did not save any money for emergency situations they won't be able to pay for the loan or credit card in full at the end of the month so they ended up having to pay the minimum amount plus the interest on the amount they owed. This can eat away their money very fast because interest rates can go up as high as 25 percent. 

It is a very bad idea to use a credit card and only making a minimum payment every month because let's say you borrowed 3000 dollars to fix your car and you are only paying a minimum of 50 dollars a month plus the interest, by the time you are done paying your credit card you might end up paying 4000 rather than 3000 dollars so never use a credit card to pay for something unless you know for certain that you can pay the full amount at the end of the month.


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