Whether you’ve just moved out on your own, bought your first home, or are expecting a new baby, sometimes life requires you to make large purchases. You need furniture, kitchenware, small and large appliances, or perhaps renovation materials for a project. Coming up with money for these large items can be challenging because they don’t fit into your normal budget, and you may be tempted to purchase with credit. Going into debt for large purchases isn’t as unavoidable as we’d like to think. Here are a few ways to plan for large purchases and avoid going into debt at every stage of your life.
How to Approach Large Purchases
Since we know they’re necessary and inevitable, just how should we approach large purchases? With careful and patient planning. This includes:
- Eliminating the “need it now” mentality
- Anticipating your needs in advance
- Saving deliberately and uncompromisingly
Tip #1: Eliminating the Need-It-Now Mentality
There’s no arguing the fact that you need furniture to sit on, dishes to cook with, and a bed to sleep on. What’s debatable is the idea that if you need it, you must get it now. This mentality can lead to financial trouble if you choose to pay with credit instead of cash, compromise your budget, and otherwise spend money you don’t have to spend. If you’re struggling with the compulsion to buy something immediately, just remember the pioneers who traveled west to start a new life. They only took what they could carry in a small wagon, and when they arrived at their destination, had to either build, make, trade for, or go without. In our spoiled Western culture, we tend to think we ‘need’ things we could survive perfectly well without for a short time. It rarely hurts to go without or wait for things; in fact, it increases frugality, creativity, self-discipline, and our appreciation for what we have. In addition, waiting to make a purchase allows you more time to compare prices, brands, and find the best deals.
Tip #2: Anticipating Your Needs in Advance
Large purchases tend to follow large decisions, such as moving to a new home, renovating your current home, or starting a family. Instead of scrambling at the last second to come up with funds for large purchases, anticipate your needs and start planning for them accordingly. Even if you’re not considering any major life changes, the law of nature is that things wears out. If you own a home for more than 15- 20 years, your appliances and household structures are going to wear out. Instead of waiting for the day they breathe their last, anticipate needing to replace these items and start saving. If you’re unsure of the lifespan of your appliances, check with the manufacturer or read reviews on the Internet. If items last longer than anticipated, you have that much more money saved for other purchases.
Tip #3: Saving Deliberately and Uncompromisingly
This is the most important part of planning for large purchases. Stop hoping you’ll have the money when the time comes, and plan to. Start saving what you can, even as little as $20 a paycheck, and you’ll be surprised at how quickly it adds up. I recommend that you save the money in a place that goes unnoticed and that you have limited access to, particularly a separate savings account online or with your bank. If you have very good discipline, you can set it aside in cash, but be sure it’s kept safe, especially as your nest-egg grows.
Fit the savings into your budget by designating money from other areas in which you have ‘wiggle room.’ My husband and I created a specific category in our electronic budgeting app. for large purchases. The plan is to set aside money into this category, and when we have enough saved, choose one of these items to purchase.
Good Things Come to Those Who Wait (and Save)
You’ll appreciate your purchases so much more when you’ve remained financially responsible. Whatever methods work best for your household and finances, the key is to plan for large purchases and patiently save up for them.
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