Money Management

Questions to Ask Yourself Before Making a Major Purchase

By  Karen Banes

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Making a major purchase can be stressful or exciting. If most of yours feel stressful, it could be because you’re simply not at peace with the idea of spending that much money on that particular thing. Ask yourself these questions about any major purchase, to feel a lot more comfortable with your decision.

Do I need it?

This is a much more complex question than it seems on the surface. There are so many things that are so entrenched in us as a basic need that we forget to question them. We need shelter, but the pros and cons of renting versus buying a home are well worth considering in depth. We need transport, but Americans in big cities really can survive without a car. We need an education, yet there are well-paid jobs that don’t require a college degree and more than one way to get that degree. If you can answer the question ‘do I need it?’ quickly and easily, then you probably haven’t given your situation enough thought.

Do I want it?

Again, this is a complex question. It just doesn’t look like it. We all think we know what we want, but often we don’t. Our brain plays tricks on us, making us assume we want things when it’s actually society, the media, or our parents who want us to have them. Often it’s the company selling it that wants us to have it, or the influencer promoting it. It’s fine to buy things you really want, even if you totally don’t need them. Just don’t fall into the trap of buying things you don’t want, for reasons you don’t understand. That’s not how millionaires are made.

Do I have to purchase it?

It’s amazing how many things you can have, at least temporarily, without purchasing them. You can lease, rent and borrow all kinds of stuff. You can access things via a subscription or membership club. Renting rather than buying can apply to things other than your home, such as your vehicles, and even ludicrously expensive designer clothes. If something is not going to be in regular use, and particularly if it’s something that is only going to be used once, consider an alternative to permanent ownership.

Is this the best price I can get it for?

If you haven’t compared prices, you’re not ready to purchase. The difference between retail outlets can be significant. Use online comparison sites to check for the cheapest price on anything from a major appliance to an insurance policy. Having building work or renovations done? Get several quotes (and let the providers know your quote shopping, so you get their best price upfront). Buying a house? The asking price is just that. It’s what the sellers are asking for. It’s rarely what they’re expecting to receive.

What’s the resale value?

Occasionally, buying something you’re not going to need forever can actually pay off. Smart shoppers can make a purchase, use it and sell it for a profit. The people who do this regularly, though, really are smart, not just lucky. They’re generally thinking ahead, and know the resale price of that car, boat, property, or another item before they make an offer. They buy used, maintain perfectly (or improve), then sell at a profit. They are few and far between, but it’s definitely possible to be one of them.

What’s the alternative cost?

What would your money be doing if you didn’t spend it on this item? Buying you something else? Earning more money via investments? Providing a sense of security and peace of mind through turbulent times? Even if you’ve asked, and answered, all the other questions, this one might change your perspective on the purchase. Consider it carefully.

Karen Banes

About the Author

Karen Banes

I’m a freelance writer specializing in online business, personal finance, travel and lifestyle. I also work as a content creator for hire, helping brands and businesses tell their stories, grow their audiences, and reach their ideal customers. I’ve lived, worked and studied in six countries, across three continents. Stop by my blog TheSavvySolopreneur.net to learn how to run your own (very) small business on your own terms. You can also connect with me at my website KarenBanes.com or follow me on Medium.com

Disclaimer: The information in this article is not intended to encourage any lifestyle changes without careful consideration and consultation with a qualified professional. This article is for reference purposes only, is generic in nature, is not intended as individual advice and is not financial or legal advice.

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