At some point in life, you’ll be in the market to buy something that costs big bucks. No matter the purchase, sometimes the decision can be challenging to make.
Here are three things you should ask yourself before you spend your hard-earned money:
Is it needed? Impulse-buying is more frequent than ever before with our smartphones and online shopping platforms. Oftentimes, the accessibility of large purchases made possible by these technologies leads to spending that may be desired in the short term but become burdensome in the long term. Taking the time to evaluate whether or not this purchase fits into your plan can help avoid rash purchases that impact your future goals.
Do you have to borrow? Large purchases often come along with the necessity to take on debt in order to pay for them. If so, factor in the amount that would be borrowed and interest that would be paid, which is dependent on the type of purchase and loan needed. Something that doesn’t seem too costly on the front end can end up being much more expensive in the long run when high interest rates and long periods of time are involved. It’s also important to consider the impact on your credit score as well as the amount of total debt you have across all your expenses.
Is it part of the plan? You work hard to afford a happy life and hopefully enjoy a comfortable retirement. Some opportunities, however, appear too good to pass up. Whether it’s taking a big vacation, buying that dream car, or finding your perfect summer home, opportunities don’t always align with the timing you had planned and you have to jump on them. Make sure the purchase aligns with your plans, both short and long term, so you can have confidence in your decision and truly enjoy your purchase.
Goals, dreams, and aspirations guide a financial plan, not the other way around. Let’s be ready when those opportunities emerge so we can be sure they line up with your goals! I'm always happy to talk through big purchases and answer any questions you have.
Questions to Ask Yourself Before a Big Purchase
September 06, 2023