Purchasing the big items is a necessity in today’s modern life. From a new car to a new fridge, there’s no avoiding the need to buy them. Knowing how to approach them means that you don’t get yourself into trouble with money lenders or your credit report. For some, a big ticket item might mean anything more than $100, and for others the limit could mean thousands. However, the approach to take when you need to make a big purchase is the same, with careful planning and saving.
Identify Need or Want
Is the purchase a need or a want? While many wants may feel like a need, it is important to be able to distinguish between the two. A need should be saved for a need, such as a car to get to work or home insurance, and a want, like new furniture or a TV, should be contributed to less frequently.
Plan and Save
First, determine how much you’ll need to save. Do your research and find out how much you want to spend. For instance, you could go for the best on the market and spend more, or you could get what you need sooner, and go for a cheaper option.
Then, you need to find the best way to save up.
- Open a savings account with a good interest rate that only allows you to withdraw money at certain times in return for a higher interest rate.
- Save a set amount each month or week by cutting down expenditure elsewhere.
- Place any windfalls into your savings account.
- Consider selling some of your unwanted or unused belongings.
Once you’ve purchased the item that you need, think about continuing to save into this account. If you found that saving in this way was easy, then it may be a good way of building up funds for an emergency purchase. For instance, if your fridge breaks down and you need an immediate replacement, then having the funds there will make the purchase easy.
Avoid Credit or Lease
It is very tempting to purchase your item on finance, but more often than not, this will cost you more in the long run, because they will add monthly interest rates on to the price.
However, if you do need the item immediately, for instance, because your washing machine is broken and you need it replaced, then credit is a viable option. Make sure that you can afford the repayments before you take out a loan. Try to avoid it if at all possible, however.
Getting the Best Deal
- Buy used. You can save a hundred by buying used as opposed to new. This is particularly true of cars, as they lose their value almost instantly. For smaller items such as TVs or furniture, take a look at eBay, or sites like Craiglist or PreLoved.
- If you buy new, then make sure you shop around and find the best prices. Use comparison sites.
- Try haggling. Make an offer instead of accepting the stated price.
- Wait for the sale. If your purchase isn’t urgent, try waiting for the sale and get your item at a marked down price.