One of the most important factors to consider when making a purchase is the lifetime cost of a product. Most people focus primarily on the purchase price of the item and forget that there are usually other expenses attached down the road. Understanding the total amount of money you will need to pay over the product's lifetime can mean the difference between having a budget that works and constantly wondering where your money went. The lifetime cost is the amount you must spend beyond the actual retail price, like batteries for a toy or food for a pet. It affects everything from the biggest purchases you make to smaller, everyday items and can add up to thousands of dollars a year. Here are five examples of items where the lifetime cost is far more important than the actual purchase price:
Many people thinking about buying a home look at the cost of rent and compare it directly to a mortgage payment. While this is one factor to consider, the lifetime cost of a house is much more than the monthly mortgage payment. A house ultimately has many more expenses than renting an apartment. If these additional expenses aren't taken into consideration, you could purchase much more house than you can truly afford. Some examples of expenses that are often overlooked when purchasing a house are the cost of furnishing a much larger area, yard upkeep, repairs and maintenance, increased insurance payments and increased utility costs.
When most people purchase a car, they are focused on the retail price they must pay. There are, however, many other factors that can tack on costs over the life of the car. Gas, repairs and insurance all need to be considered and these can vary greatly between car models. Edmunds offers a calculator to help you determine the true cost of owning a car to see how much these lifetime costs can affect the actual money spent after the purchase.