Spending money seems fun in concept. But when it comes to making a major purchase, we can find ourselves struggling to make the right choice. Some of us end up spending way more than necessary. Others don’t invest enough cash as we should. How should you handle major purchases like cars, homes, or appliances? These simple steps will help you ensure you’re getting the best bang for your buck without going overboard.
Remove Emotions from the Equation
Spending money is often linked to our emotions. We shop when we’re happy or we spend when we’re sad. Major purchases typically indicate something has gone drastically wrong. And so oftentimes fear motivates our choices. As much as possible, before you make a major purchase, try to step out of the emotional side of your current situation.
This may mean you need to sleep on a decision. Or at least quiet your soul before you dive into weighing your options. Identify what you’re feeling in the moment. As much as you can, get perspective on how your gut feelings and emotions are feeding into your choices.
Know How Much You Can Spend
I know it seems elementary but we all need reminded. You MUST have a realistic budget before making a major purchase. If you don’t have money in the bank or the ability to cash flow a purchase, it’s not a good idea. This may mean that you make a sacrifice or two while waiting and saving up the cash to buy something. We live in an easy credit society where you can be pre-approved for nearly any amount. Just because you can be approved, doesn’t mean you can afford it.
I’d always advocate that you find a different way to make your major purchase than borrow or put things on a payment plan. It’s the lifestyle we live and I definitely thought it was impossible to do things like purchase a car with cash a little over a decade ago. It takes intentionality and sacrifice but we’re living proof that it’s attainable. That being said, if you do choose to borrow, you need to know for certain that you can actually make the payments required of you.
Once you settle on a number, make it your aim to come in under budget.
Research Well Before Entering the Market
After you know how much you can spend, begin researching product specifics and prices online. If you’re purchasing a home, look at the prices of comparable homes in the same area. If you’re buying a vehicle, check out Kelley Blue Book. Before you speak to a single salesperson, you need to know the worth of what they’re selling.
Create a Nicety vs. Necessity List
Think through features you know you need and those that you’re more flexible on. For instance, you need enough seatbelts for everyone in your vehicle. You don’t necessarily need a DVD player in said vehicle. Very few purchases meet 100% of our wishlist. And we can all survive on less than we realize. Making a major purchase requires flexibility and compromise. If you end up with a product that meets a Nicety, that’s awesome. But be willing to let go of unrealistic expectations and focus on true necessities.
Seek Out an Expert Opinion
Odds are good, you know someone who has expertise in what you’re buying. While you want to make your own informed decision, it never hurts to ask someone who has knowledge of your purchase what they think. One caveat to this principle: don’t use social media to gauge opinions or ask someone who makes poor choices when it comes to money. Casting the net too broad will become confusing. And asking someone who doesn’t make the best moves financially will lead you down the wrong path. Be smart about who you ask.
Read the Reviews
I’m a big proponent of carefully checking out reviews before making any purchase – large or small. Obviously some people will love a product. Others will hate it. But you can usually find a general consensus about what you’re buying. You also may be able to spot potential problem areas when it comes to your major purchase so you can measure the risk.
Consider Subsequent Costs
We’re in the middle of purchasing a new printer in our home. But the cost of a printer isn’t just the price tag. You also have to consider and compare the price of ink or toner. In a same way, when you buy a vehicle, you need to consider fuel efficiency and how much it will cost to maintain your new ride. From utilities to upkeep, whatever you’re buying won’t really be completely paid for on day one. Think about any additional expenses your new purchase will bring.
Skip the Extended Warranty
Extended warranties usually aren’t worth the price you pay. As consumers, we usually get hit with the pitch to purchase one of these programs right when we’re closing a deal. There’s a reason for this. We’re weak with purchasing fatigue and we’re afraid of something going wrong. But most warranties go unused or are written in such a way that not everything is really covered. It’s smarter to set aside the same amount of money in a repair fund and use it on your own if there’s a problem with your purchase. Want more info? Check out this article from the Washington Post on why it’s rarely a good idea.
Sleep on It and Then Make Your Call
It’s never a good idea to make a financial decision when you’re Hungry, Angry, Lonely, or Tired. That’s why you should HALT before you take the plunge on a major purchase. If someone pressures you into making a decision RIGHT NOW, walk away. It’s rarely a good deal or a wise investment. But after you’re sure you’re not hungry, angry, lonely, or tired, you need to make the call on your purchase. Some of us waste precious time (that could be used to make money) worrying over a purchase. When it’s time to spend and you’ve saved the cash to do so, go for it.
Major purchases usually aren’t fun to make, but they are a necessity. You’ll walk into your experience with confidence and skill when you work through these steps. You’ll have a greater peace in your investment, too.
Our new book Your Money, Your Marriage is now available! Be sure to check out videos on managing money together on Facebook.
My book is now available: Slaying the Debt Dragon: How One Family Conquered Their Money Monster and Found an Inspired Happily Ever After. You can also check out The Debt Free Devotional
This post contains an affiliate link. That means when you get a great deal, learn about a way to save, or maybe even something for free, I may end up making a small commission. All prices are subject to change.
