Let’s face it. Life can be expensive! Fortunately, there are some simple and easy ways you can make the biggest events in your life a bit more budget-friendly.
Getting Engaged
If you’ve met that special someone, take a tip from Kate Middleton and Princess Diana and consider an heirloom ring, or one with an alternative stone or setting. Here are a few tips for saving big on your engagement ring:
- Work with a reputable jeweler – A good jeweler isn’t the cheapest way to get a ring, but if you’re looking at the long-term value, it can be the best option. One advantage of working with a jeweler is that you can have more control over what specific stones and metals are used, and this will allow you to be more strategic with your selection than buying a ready-made ring.
- Consider an heirloom – are there any beautiful rings in your family that you might be able to consider for an engagement ring? Or perhaps there’s one that has a nice stone, but the setting is not so great? A reputable jeweler can resize a still-beautiful ring to fit your partner, or reset a beautiful stone into any setting, breathing new life into it and bringing joy to a new generation.
- Choose a halo setting – one with smaller stones around a center stone. Your ring will still be impressive but you will save on the cost of having to find a large, costly center stone
- Choose an alternative stone – Diamonds may be “a girl’s best friend,” as the old movie line claims, but they aren’t always the best friend of a young couple starting out if you’re saddled with a big payment. Fortunately, alternative stones in halo settings are all the rage these days. A ruby, sapphire or other stone centered in a halo setting can make a big statement for a much lower cost than a same-size diamond.
You don’t even have to say that your choice was about saving money – it could be that you simply wanted your special someone to have a special ring. In the future, when you’re more financially established, you can consider replacing the center stone with a diamond. Or you may decide you prefer to keep the alternative, and unique, stone.
Weddings
Weddings can be a huge expense and source of stress for a young couple – or for their parents, depending on who is footing the bill. Popular wedding website The Knot found that the average wedding in 2019 cost more $31,000. Nearly half of that expense goes to the reception venue. So how can you save money?
- Get married off-peak – Friday and Sunday are less expensive days to wed than Saturday, because they are in less demand. Evening weddings are typically more expensive than mornings, so consider a morning wedding with a brunch reception. Time of year also makes a difference – the most popular time of year to marry is spring and summer, so you can also save by choosing to marry in the fall or winter. Added bonus: Christmas weddings can be beautiful!
- Reduce the reception guest list – The majority of your venue expense will be menu and beverage costs. These are charged per person, so the quickest way to cut expenses is to reduce the number of people attending the reception.
- DIY may not be cheaper – An inexpensive venue will be more expensive if you have to tack on costs to rent chairs, tables or other supplies to host your reception. So consider DIY venues very carefully to ensure you really will save money. You may actually find it less expensive to choose a venue that is prepared for your event without additional costs.
- Combine venues – Choose a location that can host both the ceremony and the reception. You can save money on the venue, as well as transportation and flowers.
- Close the bar – Instead of an open bar, select a “signature cocktail”: it helps make your wedding something special to remember, without the expense of paying for top shelf liquor.
For more great money saving tips, check out The Knot’s Wedding Budget 101.
Having a Child
After the wedding, the next big event in most people’s lives is having a child. Raising children is now estimated to cost more than $245,000 to age 18. The biggest cost for many families? Groceries! Feeding children is an unavoidable cost of raising them, but the good news for parents is that for families within certain income limits, a tax credit may be available to help offset that grocery bill.
To take advantage of the tax benefits associated with your growing family, you will need to:
- Obtain a Social Security Number – although you are not legally required to have a Social Security Number until a child begins working, you will need one to take advantage of the tax credit. You can do this right at the hospital when the child is born.
- Claim a dependent – Each child in the family can be claimed as a dependent on your taxes. In 2015, each dependent is eligible for a $4,000 tax reduction.
- Apply for the child tax credit – Within certain income guidelines, children may qualify for a child tax credit of up to $1,000 until age 17.
Considering Adoption?
Adoption is about the needs of the child and becoming a loving family. Yet it can also be expensive. With thousands of children in foster care who are available to be adopted for a minimal fee, many prospective adoptive parents still choose private or international adoptions – two of the most expensive and stressful life events a family can undertake.
How can you save on adoption, while keeping the needs of the child paramount?
- Consider foster care – There are thousands of children in foster care who can be adopted for a minimal fee, so why do so many adoptive parents choose private or international adoption? There can be many reasons. Some may be concerned about open adoption and families of origin. Or they may seek children of a specific ethnicity or gender. However, it’s important to remember that these issues are about parent needs, not the needs of the child. Children in foster care have a demonstrated need for a loving family, and can be any gender, age or ethnicity. Educate yourself about the children in foster care and consider carefully whether adopting from foster care may be right for you.
- Examine bias – Studies have shown that there is an inherent bias among adoptive parents towards infant girls, and away from older children, children of color, sibling groups, and boys. This can lead to competition, difficulty and expense to adopt children who are deemed more desirable. Remember that all children deserve a loving family, and avoid allowing bias to becoming a determining factor in the type of adoption you choose.
- Apply for the adoption tax credit – This credit is available for families with less than a specific gross combined income and only for adoptions other than stepchild adoptions.
Adoptive parents may doubt their abilities to parent a child who doesn’t look like them, or to connect with a child who doesn’t come into their family at a young age. Others may be concerned about their ability to parent boys versus girls, siblings versus singletons, or to maintain an open adoption and birth family contact. However, most of these concerns can be addressed through parent education and preparation, and should be carefully considered before making your decision.
Buying a Home
Short of raising kids, buying a home is one of the most expensive undertakings you’ll experience in life, and there’s no shortage of advice about how to save money. Unfortunately, much of this advice is based on false information. It’s really important, therefore, to educate yourself about the buying process, as well as about the home you want to purchase before you buy.
What are some of the misconceptions that people have when it comes to saving money on real estate?
Buying a foreclosure will save you money. It’s true that sometimes, a savvy buyer can get a good deal purchasing a foreclosed home, whether at auction or from a bank. However, in general, buying a foreclosed or bank owned home is for experienced buyers. Why? Because bank-owned properties are typically purchased on an as-is basis without the disclosure of defects that is typically required in a regular purchase and sale. You can control this risk to some degree by working with an experienced real estate agent and by having the property professionally inspected – but in general, an as-is purchase means that the buyer takes on all risk without legal recourse. It’s also important to note that when purchasing a bank-owned home the lender will require you to use a purchase contract that is written strongly in the bank’s favor.
In addition, foreclosed homes may not be as good a deal as you might think. In the current market, many foreclosed homes may have been sitting empty for months or years, or may have been damaged by previous owners. These homes are only listed when the bank believes it can make money on the property. The bank is required by its investors to get a price that is as close to market value as possible, so may not be selling at much of a discount. Do your own research or work with a reputable agent to be sure.
There’s also financing to consider. Most buyers – even experienced ones – require some form of financing to buy a home. If you’re buying bank-owned, most banks will require you to use their in-house financing, which limits your ability to shop for the best rates. If their rates aren’t the most competitive, it can cost you big over the life of your loan. In addition, if you’re planning to buy the home at a foreclosure auction, financing is usually not available, so you’ll need to have cash on hand. There also isn’t usually an opportunity to thoroughly inspect the property prior to a foreclosure sale. All in all, if you’re hoping to save money on a bank-owned property or by buying at a foreclosure auction, you’ll need to get expert advice and do your own research to make sure you don’t buy a money pit.
You should negotiate your real estate agent’s rate – This sounds like a slam-dunk way to save money, but is it really a good idea to hire someone to negotiate on your behalf, if they aren’t able to successfully negotiate their own commission? Something else to consider: on a $300,000 home, your buyers’ agent’s cut is 1.5% of the total sale price, or about $4,500. This amount can easily be recouped by an agent with good negotiating skills and real estate expertise. You might be able to get your agent to take a lesser commission, but if they lack the skills and experience to guide you through the process and ensure you get the home you want for the best price, it could end up costing you much more than you’ll save.
Does that mean you should never negotiate with a real estate agent about their commission? No. As a seller, it can definitely benefit you to do so; after all, the seller is the one paying the commission. Just make sure that negotiating to save money on commission doesn’t end up costing you more in the long run.
So if these tactics don’t guarantee savings, what are some smart ways to save money on real estate?
Cut PMI – PMI, or Private Mortgage Insurance, is the insurance that is paid to your lender when the value of your mortgage exceeds 80% of the home value. It can be eliminated with a down payment of 20%, or in some cases, through what is known as an 80/10/10 (80% first mortgage, 10% second mortgage, 10% down payment) loan. Generally speaking, what you save on PMI will be spent on the second mortgage, so the best choice is to save until you have 20% down, or consider purchasing a less expensive starter home.
Buy the right house – Buying the right home means more than just buying the home you like the most. It also means buying the right kind of house to position you for long-term gains. In this case, bigger isn’t necessarily better. The old adage says that it’s best to buy the worst home in the best neighborhood; savvy real estate investors know that if you’re looking for the best return over the long haul, an average size or smaller house in a great neighborhood, rather than the biggest house in a lesser neighborhood is the safer bet. However, the adage is wrong that you should buy the worst house – homes in the bottom 10% of the market actually tend to underperform the market as there is less demand for those types of homes. The best strategy is to buy a home that is closer to the average or slightly below in the best neighborhood you can afford.
Don’t get emotional – It’s important to look at this as an investment as well as a very personal decision; this means that to the extent possible, you need to consider the house on its merits and not become emotionally invested until the home belongs to you. Staying detached through the negotiation process will give you more leverage, but you’ll need to be prepared to keep looking if negotiations don’t work out.
Look before you buy – One of the biggest mistakes a buyer can make is to purchase a home without an inspection. Inspection by a professional home inspector typically costs less than $500 and should involve taking a thorough look at the structures and property – from basements and crawlspaces, to attics, the condition of the roof and systems such as heating and air conditioning, and much more. It allows you to find out in advance what to expect in terms of repairs and maintenance after the purchase. It also offers an opportunity to have issues resolved before the home becomes yours – potentially saving you thousands of dollars.
Get the seller to pay closing costs – When a house is sold, the seller will typically leave the closing table with cash in his or her pocket, while the buyer will have to come up with the closing costs. These closing costs can include down payment, loan fees, and other costs. Many buyers who are short on cash negotiate to have sellers pay certain allowable closing costs – however, in order to make this work, you’ll typically need to make a full price offer or better, and not negotiate for many repairs.
Vacations
There are many well-known ways to save money on vacation travel, such as traveling with frequent flyer miles, or using hotel points to pay for your stay.
A few of the less well-known ways include:
- Download an app – there are apps available that can provide deals on meals and other common needs during your travel. Apps like Foursquare can help keep you in the know about deals at your destination. Apps like Lyft, Vrbo, and other home-sharing or rent-by-owner sites can also help you find deals on transportation and lodging.
- Obtain deals in advance – Apps like Groupon or Living Social can be a great way to find deals in the city you will be visiting.
- Save on transportation – With the rise of Lyft and Uber, it is now possible to save big on ground transportation. However, because those companies are not regulated like a regular taxi, there can sometimes be some risk. Another alternative? Public transportation. In most major cities it is safe, cheap and easy to use. In much of Western Europe, the public transportation systems are the simplest and easiest ways to get around.
- Save on hotels – A great way to save on hotels – if only for a night or two – is to consider an overnight train ride to your destination, or possibly a red-eye flight.
- Consider a staycation – A staycation doesn’t necessarily mean staying home, it can also mean going to a destination within driving distance of your home, or taking a day trip.
- Take advantage of freebies – With more airlines charging a baggage fee, leaving your toiletries at home and using the free products provided by your hotel can save space in your bag.
- Do your research – Many cultural sites such as zoos and museums may have free or reduced entrance fees on certain days. Research the sites you plan to visit, and plan your itinerary accordingly.
- Take advantage of discounts – Discounts may be available for seniors, students, active duty or retired military, or veterans. Research whether you are eligible and take advantage.
- Avoid restaurants and hotel breakfasts – The most important (and cheapest) meal of the day becomes very expensive if you stay and eat at the hotel. Buy some cereal and milk to keep in your room refrigerator, and you can save big. Another alternative is to look for a hotel that offers free breakfast, since a hotel breakfast can easily add upwards of $35 to your nightly rate. Just make sure that the overall nightly rate is still competitive.
- Extend your layover – Get more from your vacation dollar by extending your layovers. If you’re traveling internationally, for instance, you might have to connect flights in London to get to Paris. If so, extend your layover to enjoy a day or two in London before traveling on. You can save big on airfare and get more from your trip.
- Go off season – Prices are highest during the most popular seasons and the best deals can usually be had when vacation destinations are working harder to attract visitors. Some ideas? Consider visiting a ski resort in the summer to enjoy summer activities such as hiking, horseback riding, or mountain biking. Or visit a beach in winter to watch the storms roll in off the ocean. Be creative with your vacationing.
College
The College Board reports that the 2015–2016 cost to attend a “moderate” in-state public college averaged more than $24,000. The cost to attend a moderately priced private college? Nearly twice that, at an average of nearly $48,000. That means the cost of a bachelor’s degree can range from $100,000 to a quarter of a million dollars. That’s a big chunk of change! So how can you save?
- Set up a 529 or college savings plan early – Some advice says to start these plans in high school, but the sooner you start, the sooner you can build up significant savings towards college. A 529 plan is a savings plan designed to encourage saving for future college costs, that offers significant tax advantages. 529 plans are sponsored by all 50 states and the District of Columbia. 529 plans lock in tuition at public colleges and universities, and often involve paying for a set number of college credits at current prices. College savings plans are more flexible, allowing money saved to be used at any private or public school, in or out of state. With tuition rates increasing rapidly, starting either of these plans as young as possible can mean serious savings by the time your children start college, which is one reason it is important to start early.
- Take advantage of reciprocation – Many states have tuition arrangements with neighboring states. Investigate if your state has any of these programs to increase the number of schools that you can attend while paying in-state tuition.
- Seek scholarships and financial aid – Freshman year is only the first step. Students need to be diligent in renewing and applying for new scholarships for the subsequent years.
- Keep room and board costs low – A big part of the college experience has to do with the living experience itself and learning how to budget and live independently for the first time. There is a reason people joke about students eating ramen noodles. But while actual student poverty is no joke, the living situation itself does offer opportunities for students and parents to reduce costs. Roommates are a great way to save, both on and off campus. Students can also save by cooking for themselves when possible – for instance, you can make breakfast in your own room using a toaster or microwave, and cut back on the money needed for an on-campus meal plan. With the high, fixed costs of tuition, room and board costs should be carefully considered and budgeted for.
Buying a Car
The first big purchase for most recent graduates is a new car. How can you save big on your next ride? Here are a few tips:
- Bargain over the internet – Many, if not most, car dealers these days offer online negotiation. These offer a big chance to save – internet sales people are oriented towards selling on volume, not on the margin for an individual car, so they are more likely than a salesperson on the lot to give you a good deal. You can still go to the car lot to test drive, but doing your negotiation online will allow you to avoid the financing and insurance office at the car lot, which is where a lot of costs get added on after the initial negotiation. That brings us to our next tip:
- Bring your own financing – Banks and credit unions generally offer better interest rates on car loans than the car dealer’s in-house lender. So, it is in your best interest to line up your financing before you buy.
- Do your own research – Asking price may not accurately reflect the value of the car, so be sure to research car values using a resource like Kelly Blue Book.
- Time the market – New model years generally roll out between August and October. That means that car dealers will be most eager to get last year’s cars off their lots at around that time. If you can time your purchase for those months, you can save big.
- Get an inspection – Just like when you buy a home, you want to know before you buy that beautiful new or classic car whether it is a lemon or not. When buying from a private party buyer rather than a dealer, you can ask your mechanic to take a look under the hood to make sure you know what you’re getting.
- Shop around – Of course, you will shop around for your new car. But did you know you should also shop around to get the best price on your trade-in? It’s true. Often, the best price for a trade-in is not the same dealer you will buy your car from, so check with several dealers to see who can offer you the most.
- Don’t be emotional – An old adage of negotiation is that he who cares least, wins. That means, that when purchasing a car, you shouldn’t be afraid to walk away from a bad deal. The likelihood is that the seller wants to sell you the car more than you want to buy it.
Retirement
Most of us envision it as a time where we’ll have plenty of time to pursue the hobbies we enjoy, spend time with family and friends, and live a comfortable life without having to trek to the office every day. And yet for many Americans, the golden years are far from this vision because they didn’t save enough money during their best earning years.
Like saving for college, the best way to ensure you will have a nest egg saved up by the time you retire is to start as early as possible. Most advice says that to reach your retirement goals, you should start saving by age 25. You’ll be able to set aside less each year, and still have more in your account by the time you retire. It also allows you to take advantage of compounding over a longer period.
More sage advice:
- Be realistic – The best way to ensure you have enough money to retire is to be realistic about how much money you will need. With people living increasingly long lives, and often requiring expensive medical care as they near the end of life, the money you need to live comfortably through your retirement could be more than you think. Do your research and meet with a retirement adviser to set and adjust your target for retirement savings.
- Cut costs – Choose investments that have minimal fees. Many savings instruments allow you to choose between fees paid up front at the time you invest, or paid at the end when you withdraw. Often, upfront fees will be lower, so carefully investigate this before you decide where to put your money.
- Don’t withdraw early – If you’re saving in a 401(k) or other retirement plan where contributions are made before income taxes are applied, there are significant penalties for withdrawing early from those plans. Avoid these by not withdrawing before age 59½, and rolling over your plans rather than withdrawing funds when you change employers. If you need access to the money before retirement, inquire whether your employer offers a 401(k) loan program. In some cases, these will allow you to take out a short-term loan against a portion of the balance in your account – you may even be able to pay back the interest to yourself.
Funerals
Losing a loved one, or the end of our own life, is a major life event that we don’t like to think about very much, but just like the others, it has significant costs associated.
The good news is that just like the other life events we’ve discussed, funerals can be much more affordable with some advance planning. Here are some tips that can help you save money, while still ensuring that you or your loved one are remembered with the dignity you deserve.
Consider cremation – If there are no religious or other objections, cremation can be a great way to save on funeral costs, and it doesn’t have to be a bare-bones affair. You can still hold a memorial service in the place of your choice. You might even choose to have a burial or place an urn in a columbarium where your loved one can be remembered forever. The average cost of cremation is one-third less than the average cost of a traditional funeral and burial. That’s a significant savings over traditional burial.
Plan ahead – Cremation and funeral preplanning can offer another way to save by locking in the services you will need in the future at today’s price. It also clearly communicates your wishes to your next of kin and allows you to save your family the stress and headaches of having to pay for your funeral or cremation. With costs increasing at more than 28% over the last decade, this is an important consideration if you want to save.
Go with a package – Many funeral and cremation providers offer packaged services – either pre-planned or at the time of need – which can allow you to save by bundling together many of the services you need. Contact your provider to find out about their packaged funeral or cremation offerings and learn what is included.
Life has many milestones along the way, and unfortunately, many of them do carry some significant costs. But with a little planning, you can keep your costs down and have more money for the things that matter to you.
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The Neptune Society is the nation’s oldest and largest provider of affordable cremation services. Whether you have an immediate need or want to plan cremation services in advance, we are always available to assist you and your family.
Call 1-800-NEPTUNE (800-637-8863) today or contact us online to learn more.
