Budgeting Basics for Young Adults
Rachel Best
Mrs. Johnson
June 29, 2009
Rachel Best
Mrs. Johnson
Computer Applications I
June 29, 2009
Budgeting Basics for Young Adults
For every one hundred freshmen in your school, sixty-seven will actually graduate in four years. Hopefully, by the time your graduation date is scheduled, you will have earned the right to walk across the stage and receive a diploma with the other sixty-six students in your class. What are your plans after high school? Do you plan to immediately join the work force? Do you plan to earn an associate’s degree at a community college? Do you plan to earn a bachelor’s degree? Of those sixty-seven freshmen who graduate from high school, forty-one will attend a four-year post-secondary institution. Of those forty-one, only nineteen will actually earn a college degree. This report will compare the purchasing power of individuals as related to their level of academic attainment.
If you haven’t already done so, one of your first major purchases will be a car. Are you looking for a new or a used car? Do you want a car that has all of the bells and whistles and the newest technology or one that is at least not held together by duct tape? A top-of-the-line model will surely cost more on the front end and depending on the make and model, may require some pretty hefty maintenance fees. On the other hand, you can bet your tail pipe that the duct tape model will require more of your time and money in the long run. The next question to consider is how much time do you plan on driving. You may look really hot in a new car, but without money for gas and insurance, you won’t be able to cruise around town. You’ll have to invite your friends over so they can see how good you look behind the wheel while you sit in your driveway listening to the radio! This is no joke. With gas prices in 2008 reaching an all time high, a car that averages thirty-five miles per gallon will cost about $107 per month just for gas. What about maintenance costs and insurance? According to Automobile Magazine, a 2003 Jeep Wrangler with a purchase price of $10,349 will cost, on average, $4,500 per year to operate. This cost includes depreciation, financing and interest rates, insurance cost, state fees (taxes), fuel, maintenance, and repairs. A 2006 Mazda 3 will cost about $5,000 per year to operate. Are your eyes bigger than your wallet? Be realistic when selecting your first car and be aware of the consequences of buying more than you can afford. Banks and finance companies will gladly provide a loan to purchase a vehicle and will just as gladly wave and smile at you as they drive away with your repossessed car. Car expenses, rent or mortgage payments, and utility bills are referred to as fixed expenses. Fixed expenses that are not paid when they are due can result in severe consequences. For example, suppose you had to juggle your finances this month and paid rent instead of your car payment. What do you think will happen? You run the risk of losing your car, destroying your credit rating, and loosing any money you paid toward the car. In order to be successful financially, you must plan your budget with realistic expectations and goals.
