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It is inevitable. At some point, we all need to make a large purchase. Anything over $100 my husband and I consider a large purchase and we talk about it before actually pulling the trigger. There are a few questions you can ask yourself before making a large purchase that will make the buying decision easier.
First, decide for your family what you consider a large purchase. Depending on where you are in your financial journey this could be $100 like my husband and I or even $1000. The definition of a large purchase is going to vary from family to family based on their current situation. It may also change for you and your family as you continue on your financial journey.
10 Questions to Ask Yourself Before Making a Large Purchase
Can I pay for this large purchase with cash?
If you can afford to pay cash for the large purchase without touching your emergency fund you are at a great start. While this is a good benchmark to start with the following questions will help you make the decision even if you do have the cash on hand.
Do I really need to make this large purchase?
You need to consider if the purchase is necessary. Is it life or death? Really, I am being that dramatic. If it’s a matter of life or death then I may consider going into debt for the purchase.
If you are just looking to upgrade a particular item then I would really question if I need to make the purchase. Do I have something else at home that is getting the job done? Is there a cheaper option available?
There is a big difference in wants vs needs and you’ll need to consider how necessary this large purchase is for your family.
If the purchase is necessary, do you need to make it right now?
If you do not have the cash to pay for the item consider if you need it right now. Can you wait a few months to make the purchase and pay cash? I highly recommend setting up a sinking fund for the purchase to help you pay cash for it in a few months. You may need to look at other options in the short term until you can make the large purchase.
How often will I use this large purchase?
When considering a large purchase you should know what it is going to be used for how often it will be used. If it is an item that will be used daily like a couch or a vacuum that will be used regularly it is easier to pull the trigger on the large purchase.
If it is something that you think you want like a swimming pool but aren’t sure how often you’ll actually use it, it may be time to look at alternatives. You don’t want to spend thousands of dollars and have regrets with the purchase.
Can the large purchase be bought used?
You can buy almost everything used now. You can find anything from lawn mowers to washing machines on Craigslist or other resale websites. Also, you can purchase used vehicles as well. There are many cheaper options available if you are in a bind and need to make that large purchase now. It will also help you save hundreds of dollars.
Does this large purchase go on sale?
If you are looking for electronics or something similar there are sale cycles the retailers use. The same goes for vehicles. If you follow a retailers pricing for a few months you’ll be able to tell the rock bottom price. Don’t be afraid to price compare and shop around. You can save hundreds of dollars by pinning two big box stores against each other. Many of them will now price match just to get your sale.
What is the return policy for this large purchase?
If you are making a large purchase know what the store’s return policy is. While you don’t necessarily think you will be returning the item it is good to know if you have 30 days to return something or only 15 days etc. This will give you time to test out the product and make sure that it is working for your family. If there is no return policy you’ll really need to sleep on the idea of making the large purchase.
Have you done your research?
Research is very important when making a large purchase. You need to know exactly what you are buying and why you need that particular model. Look at the reviews as well. If the item has raving reviews you’ll have peace of mind when making your purchase. If you aren’t able to find much information about this particular brand it may be time to move on.
Will this large purchase bring me joy?
We often make purchases based on what we are seeing on social media or based on a false premise that we need the item in our life. Will this purchase bring joy to your life? That is very Kon-Marie but if you aren’t going to love the purchase for years to come just skip it. Save the money for a purchase that will bring you joy and you’ll be excited to use every day.
How much time did it take to earn this money?
This is a question I am adding at the end because it is more about money mindset than anything else. When my husband and I started our debt free journey I turned my purchases into the question of how many hours did I spend working to pay for this?
Let’s look at an example. Say you make $20 hourly and will be spending $1000 on a new refrigerator. Is that refrigerator really worth 50 hours of your time away from your family to be work? If it is then great, make the purchase. If not, look for a cheaper option.
Once I started comparing my purchases to the amount of time I have to spend at work I changed my buying patterns. It really does open your eyes to the value of a dollar.
You should not make a large purchase in haste.
The biggest thing when making a large purchase is knowing that you have the cash to pay for it. You can ask yourself all of these questions and still come to the conclusion to buy an item but knowing you are paying cash will give you peace of mind. I struggle to tell you to go into debt to make large purchases. We are in an era of overconsumption and most purchases can wait or not be made at all. Think really hard about the purchase and if it is necessary to make.