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6 Things to ask yourself before making big purchases - CCCU

 Monday, August 19    CCCU

Questions to ask yourself before making a big purchase

 
Making big purchases and investing in your future become a part of life. At some point, you’ll need to decide what, when, and how to buy certain items or possessions, but it’s essential to be cautious and consider how these decisions will impact your personal finances in both the short and long-term. Are you considering buying a house, car, boat, appliance, computer, or another expensive item in the near future? While the definition of “big purchase” is different for everyone, there are a few things to consider to make it easier to plan for larger expenses.


6 Things to ask yourself before making big purchases


What’s the best way to decide if you should buy something now, later, or never? Here are six things to ask yourself before making big purchases to make sure you’re making smart decisions with your money.


1. How much cash do I need to buy it?

The first question you should ask yourself before making a large purchase is: How much cash do I need to buy it? If your purchase requires a down payment, you’ll need to have a certain amount of cash on hand before committing. Do you have enough money in your bank account to afford a down payment (or the entire item) without wiping out all your savings? If so, it could be worth moving forward with your purchase.


2. Is it an impulse buy?


There’s nothing wrong with being spontaneous once in a while, but when it comes to big purchases, it’s in your best interest to think large expenses through. The next question to ask is: Is it an impulse buy? Have you been planning carefully, saving money, and taking the time to consider this purchase? If it’s something you’ve been mulling over for a while, it might be worth buying. However, if you haven’t given yourself enough time to think it over, you may want to take a step back and evaluate the purchase a bit longer.


3. Have I shopped around enough?

Another question to ask yourself before making a big purchase is: Have I shopped around enough? Virtually all investment items (including cars and houses) and other expensive purchases can be acquired for a lower rate if you do your research and remain patient.
 
If you’re thinking about applying for a mortgage or auto loan, you can get the best interest rates by shopping around and inquiring with different lenders like CCCU. Similarly, you can find appliances and electronics on sale, used, or at a better value when comparing prices at different retailers. Shopping around also involves reading reviews and exploring various brands, lenders, or contractors to know if you’re getting the best deal.


4. Is my purchase a good investment?


Before shelling out tons of cash on a big-ticket item, ask yourself: Is it a good investment? Buying a home is likely a good investment, but this will depend on the housing market and the economy overall. A brand new car is not necessarily an investment item because of how quickly its value will depreciate. However, if you need a car to get to your job, a laptop for work, or a medical device that will contribute to your well-being, purchases like these are typically worth the money.
 
Not all big purchases need to be considered a good investment simply because they provide you with a direct financial return, but they should generate enough value to your life to be worth the money.


5. Can I actually afford my purchase?


The next thing to ask is: Can I actually afford it? Prior to making a significant purchase, it’s vital for you to take the time to evaluate your finances to determine whether it fits into your budget. Ask yourself, do you need to use a credit card to be able to pay for the purchase? Would you be better off postponing it until you have more money saved? Questions like these will help you make thoughtful decisions around how you use your money that could prevent taking on debt.
 
If you don’t have enough available cash to cover the entire purchase or are unable to make a down payment with money left over in your bank account, you may want to hold off. Keep in mind that when you make a down payment, you’re also agreeing to make ongoing monthly payments. Additionally, being able to pay for something also means you can afford to make all future payments on time after buying it.


6. Do I really need it?


The last question to ask yourself before making a big purchase is: Do I really need it? Is this a thing that you need, or is it a luxury item that you could live without? If you can afford extravagant items without making your personal finances suffer, then it’s OK to make that type of purchase.
 
However, when it’s something you want but don’t necessarily need, it’s smart to reevaluate your plans around purchasing it. On the other hand, if you’re unable to get by without a particular item, go ahead and make the purchase, but be mindful about fitting it into your budget and shopping around for the best price.


How managing your money and making smart purchases will lead you to financial security


Making big purchases can feel amazing in the moment. But if you rush into something you can’t pay for, or invest in something you can’t actually afford, it could lead to cleaning out your savings account or put you in debt. Financial security is all about saving money, being patient, and making smart choices around how you use your money. To get the best mileage from your earnings, we offer a series of accounts that will help you manage your money with ease. These include:
 
Home Equity Line of Credit: This loan option is a great way to finance all of life's bigger projects – sprucing up the kitchen, buying a boat, helping your kids through college or consolidating those high-interest credit cards.
 
Holiday Savings Accounts: Saving for the holidays? Each year before the holiday season begins, we will automatically send you a check from your Holiday Savings account, or we will transfer funds to your other CCCU accounts, so you can begin your holiday shopping with ease.
 
Personal Savings Accounts: We offer payroll deduction and competitive dividend rates to help make your saving experience easier.
 
Retirement Accounts: We offer Traditional and Roth IRA options to help you save for the future during retirement.
 
Consolidated Community Credit Union is here to help you gain control of your finances, boost your monetary health, and make you feel confident in your financial decisions. We also offer first-time homebuyers savings accounts as well as new and used auto loans, home loans, and more. For help navigating your next major purchase, contact a member of the CCCU team today.
 

 

Q&A to Making Large Purchases Easier


Thinking about making a big purchase? Follow this flowchart to determine if it’s the right financial choice for you.


Do I have enough cash to buy it without wiping out my savings?


No Wait until you have more money saved.
Yes


Is it an impulse buy?


Yes Hold off until you’ve given it more thought.
No


Have I shopped around enough?


No Do some research, read reviews, and compare prices.
Yes


Is my purchase a good investment?


No You may want to reconsider.
Do I need it for my job, health, or safety?
Yes


Can I actually afford it (including future payments)?


No Wait until your finances are more stable.
Yes


Do I really need it?


No ? If you can afford it, but don’t necessarily need it, it may be OK to move forward.
Yes
Make the purchase. It sounds like this is a smart financial choice for you!


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