What are some examples of Major expenses?
Major expenses are the big-ticket items that require a significant amount of planning, saving, or budgeting to afford. These are not your everyday purchases, but rather costs that can have a lasting impact on your finances. Here are a few common examples:
Buying a Home: One of the largest expenses most people will encounter. Purchasing a house typically requires saving for a down payment and managing a mortgage, which can affect your finances for years.
Higher Education: College or university tuition is another major expense. This includes not only the cost of classes but also textbooks, housing, and other associated fees.
Buying a Car: Whether new or used, vehicles come with a hefty price tag. Beyond the purchase itself, you also need to budget for insurance, maintenance, and fuel.
Medical Expenses: Healthcare costs, especially unexpected ones, can be very expensive. This can include hospital bills, surgeries, medications, or ongoing treatments.
Weddings or Major Celebrations: Planning a wedding, for example, often requires significant savings to cover the venue, catering, attire, and other expenses associated with a large event.
Starting a Business: If you're an entrepreneur, launching a business can be a major financial investment, requiring money for equipment, inventory, marketing, and more.
Retirement Savings: While not an immediate cost, saving for retirement is a major financial goal. Setting aside money now ensures financial security later in life.
These expenses often require long-term planning and careful budgeting to avoid financial strain. Being prepared for them can make a big difference in your financial well-being.
Purchasing a Car
Purchasing a car is a big expense, there’s two options to purchase a car, buying and leasing. You might be asking well which one is better? Well it’s all based on you: how long you'll own the car for, loan conditions, and what vehicle you’d like to purchase.
Purchasing a House
Pros and Cons of Renting and Buying
What is a Mortgage?
Watch the short informational video below to find out!
Mortgages are super important to know, because houses are expensive! So, many take out mortgages to afford their homes. This is another reason as to why keeping a good credit score is important. If you have a bad credit score, banks could deny your request for a mortgage. Think of a mortgage as an agreement that your house serves as collateral until you pay off your debt.
Paying for College
College is expensive, and that’s a fact. Most people have to take out loans when applying for college. The average college debt for the U.S. is 1,600,000,000,000 (yes that’s a lot of 0s), or $1.6 trillion in federal student loans. That’s why many people apply for financial aid. Financial aid for public schools are funded by tax payer money, whereas private school financial aid is funded by their foundation. Contrary to popular belief, financial aid is not given based off of income, but instead off of expected family contribution. In order to receive aid, you will have to complete the Free Application For Federal Student Aid, or FAFSA. This determines your families expected contribution.
Many also receive scholarships, such as the national merit scholarship which is given for receiving a good sat score (the top 3% of students in the country) and top notch grades. Schools also have their own scholarships that are given for academic, musical, and athletic excellence. This is also a way for them to encourage you to attend their school.
While, some colleges vow to pay all of your financial need, many don’t. Even after receiving scholarships, many students are still left having the pay a lot of money. So, they have to get a loan. This works exactly like other loans: loan money from a lender and then pay the debt and interest using your savings.