We all love a nice shopping spree when we’re down, to celebrate something we’ve achieved, or when we just can’t seem to find something to do. You only live once, right? Shopping is really fun until all the excitement is gone (and you know it will be at some point) and you’re left with an empty bank account, stressed out, and feeling guilty.
Now, multiply this by 10 and you’ll see the consequence of rushing into a big purchase. If you and your partner are getting ready to spend some big money, you have to take it one step at a time. Ask yourselves, do you really need it or do you just want it? If it’s the latter, think about how it will affect your budget. Will you choose financing or pay it outright? Does it come with extra fees?
You’re in for nothing but debt and headaches if you go into this blindly, so get ready to do a lot of thinking and even more research.
Be Wise in All Financial Decisions
Making the right purchase means finding the right item at a price that works for you; one doesn’t work without the other. Here’s how to do financial strategizing properly:
Make a Joint Savings Plan
If you have plans to buy anything of larger value that can’t be bought with a weekly or monthly paycheck, it’s best to save money. If you have a good savings plan, you’re enabling yourself to buy things that you otherwise wouldn’t be able to afford. And the money in the savings plan can build up faster than you’d realize.
The first thing to do is to make a savings goal, meaning you have to know exactly how much money you need and by when. If you have problems with staying consistent, you can always set up recurring transfers from your main account to the savings account.
Get Familiar with Financing and Payment Options
No matter how good you are at saving, some purchases can’t be done without financing, so get to know your options. If you pay in cash, there’s no interest, but that’s not always realistic.
If you’re thinking of financing, compare different loan offers, interest rates, and terms of repayment to see what the best deal is. Some lenders will offer lower interest rates to borrowers who have strong credit, so it’s a good idea to check your credit score first, and apply second. You can check websites like Mr. Rate to compare the options.
Compare Prices
Dig, dig, and then dig some more. Never jump into a big purchase without researching and comparing prices because you don’t want to pay more than you have to. See what the prices are in different places because some of them change according to the time of the year.
Black Friday, end-of-season sales, and holiday discounts can lower the prices a lot, so why not take advantage of it? Also, try to negotiate. A lot of sellers will tweak the price and, if you show them another store has a better deal, they might even throw in some extra perks.
Post-Purchase Expenses
Most people think only about the upfront cost when they’re making a big purchase; don’t be like them. Whether you’re purchasing a vehicle, a household appliance, or are planning a holiday, you should think of all the extra/hidden fees before you commit.
Your goal is to acquire that item which will not just be affordable at the time of purchase but also remain affordable in the long run.
If you require an example, then just imagine yourself buying a Ferrari, and then not being able to pay for insurance, gasoline, etc.
Step-by-Step Checklist
A big purchase is exciting until you realize you’re underprepared and it will stress your finances. Here’s a checklist that can prevent that from happening.
Check Your Financial Health
You and your partner need to take a close look at your finances, and that starts with checking credit scores because it’ll affect your ability to get financing. Then, review your income and savings to see how much you can afford.
Setting Goals and Budgeting
Once you know where you stand financially, set a goal for your purchase. What are you buying? Why do you need it? How much can you spend?
Just because you qualify for a loan doesn’t mean you should get the maximum amount.
Making the Purchase
Discuss the purchase with your partner, go over all the details relating to warranties, return policies, insurance, etc. Investing time and effort into this before the purchase helps you avoid issues later down the road.
Once all the boxes have been checked, you’re good to go.
Conclusion
While it’s thrilling to plan a huge purchase, it’s very advisable to give yourself some time to think it trough and to think about all the details that come with the actual purchase; don’t think only about the initial spending, but take the whole picture into account.
Make a plan, involve your partner; make sure you’re financially capable of covering the whole thing long-term. A little bit of foresight and planning will save you a lot of headaches down the track, so don’t commit to anything unless you are 100% ready for it.
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