Making a Major Purchase
“It is good to have money and the things money can buy, but it is good, too, to check up once in a while and make sure you haven’t lost the things money can’t buy.”
George Horace Lorimer
“Money is of no value; it cannot spend itself. All depends on the skill of the spender.”
Ralph Waldo Emerson
Making a major purchase is like undertaking any major project and requires planning and goal setting prior to the purchase.
First, what is a major purchase? We define this as any purchase which costs more than 10% of your gross annual income (or 5% of your net assets) and will include home renovations, purchasing a car, some types of travel and purchasing some items such electronic equipment and furniture.
Since these activities often require a significant outlay of your money, there are some key decisions to be made.
- Is this a pressing need or something that we want – can it wait or must we have it now?
- Over time, will the item appreciate (go up in value) or depreciate (decrease in value)?
- How will we fund the purchase – savings or borrowings?
- What is the total cost of the purchase – upfront and continuing?
- Which item should you actually buy – which offers the best value for money?
- Other than price, what else is important to you?
- Where can you get advice that you can rely on?
Major purchase decisions will stay with you for a long time (physically and financially), so you need to invest the time and research into ensuring that the decisions you make are the right ones.