Ready for These Financial Decisions?

Ready for These Financial Decisions? bb3 Nov 12, 2014

By Staff Writer

  • Email
  • Print
three young adults looking at financial papers.jpg

You may be thinking it’s time to buy a home, finance a new car or purchase a life insurance policy. Here are tips to help you determine if you’re ready to make these first-time financial decisions.

Are you ready to buy a house?

First things first: Do you have money saved for a down payment? You should aim for 20 percent or more of average housing costs in your area to avoid private mortgage insurance. If you’ve set that aside and have been preapproved for a mortgage loan, then you’re on the right track. But before falling in love with your dream home, it’s important to understand what you can — and can’t — afford. In addition to a mortgage payment, your monthly expenses may include property taxes and insurance, which vary by location. These can add up to more than you might think: According to the Insurance Information Institute, home insurance premium costs average around $800. On top of that, you’ll want to factor in maintenance costs and desired upgrades.

Are you ready to buy a car?

Buying a car also requires more than being able to cover monthly payments. If you’ve also saved up for additional costs, including fuel, insurance premiums, routine maintenance and repairs, you’re almost ready for car ownership. Next step: Do your research. First, find a car that’s financially reasonable — the monthly total of all of your household’s car payments shouldn’t exceed 20 percent of your household’s take-home pay. Then make sure your desired car won’t rapidly depreciate in value (resale value) and is well-suited to your driving needs.

Are you ready to purchase life insurance?

A life insurance policy can help support your loved ones financially when you’re gone. It isn’t just for married couples with children, either: If you have dependents of any kind, you may be ready to consider life insurance. Before committing to a policy, decide whether term or whole life insurance is best for you, and calculate how much coverage you may need. For more information, contact your State Farm® agent.