The definition of ‘big’ is going to be different for everybody but if you’re looking to buy something like a property, car or even take a big trip then it’s worth asking yourself these questions to begin planning.
1. Do you really need it?
If it’s going to come at a big cost, what are the pros and cons of spending the money? Create a list of what you may have to sacrifice as well the benefits the purchase may bring.
If you think you need a car, understand how much of your salary each month will be needed to repay the cost. Will this have a knock-on effect of how much money you have to spend on groceries or other basics? You may still go ahead with making a large purchase but this will help you understand your total financial picture once you have.
2. When is the best time to buy?
The cost of large purchases such as houses, cars and overseas trips will vary depending on when you make them. Keep an eye on interest rates and any trends. For property you want to know what’s happening in the market, while things like flights and cars typically have times of year where sales are on offer.
3. How do you want to pay for it?
It’s ideal to save as much as you can so you reduce or avoid paying interest on either a loan or credit card. If you need to borrow money to make your purchase, understand the costs and thoroughly research repayments before you commit so that you understand the overall impact on your day to day finances.
4. How does it fit into your budget?
Based on the estimated cost and your ideal purchase date, how easily will saving for the purchase fit into your current budget? You may have to make some sacrifices to mean that you save enough by your target date. Assess what’s achievable and make some alterations to your timings if necessary. If things are looking impossible you may have to consider a more affordable version of what it is you’re buying.
5. How can you make the most of it?
If your item is one that you plan on re-selling, factor this in to your planning. With property and cars there will be times to sell where you can maximise the price. Plan for this ahead so you can line up your next big purchase.