Questions to Ask Before Making a Big Purchase

If you’d like to get the most from your available money, it’s worth spending wisely. This often means spending after some careful deliberation. The larger the purchase you’re contemplating, the more important it is to think about it before you commit.

So, while you might invest your windfall in a new toaster with minimal thought, the investment in certain larger items, like fridge-freezers, electric cars and houses, might demand some introspection and research. If you’re going to distinguish a sensible purchase from a not-so-sensible one, however, you’ll probably need to contend with a few specific questions.

How will you pay for it?

You can either pay for an item with money you already have or borrow to make a purchase happen. In the former case, you’ll be saving – perhaps with careful planning and note-taking. In the latter case, you’ll need a plan to pay back the amount plus interest. Naturally, it pays to avoid high-interest debt unless you can be confident you’ll repay quickly. Read the small print. For most of us, a good strategy is to borrow only with great care.

Is it really worth it?

The modern world is based on consumption. We earn money through work and justify the time we’ve spent working by spending that money. But it’s a mistake to think of the money in your pocket as simply waiting to be spent on anything. Ask yourself whether a purchase is necessary and consider the potential alternative uses for that money.

For example, if you’re buying a new washing machine, you might work out exactly how much more efficient a more expensive model is and how long it will take for the lower running costs to justify the higher up-front price.

Similarly, if you’re in the market for a new car, you’ll have many hidden costs to weigh. These might include fuel, taxation, replacement tyres, and the like. You can minimize these costs in a range of ways, including shopping for premium Pirelli tyres from online vendors. What matters is that you’re able to anticipate and plan for these costs rather than being surprised by them later.

Do you have a plan?

The best purchases tend to be the ones you’ve had time to think about. If you know what you’re looking for and allow yourself to stew on a decision, it’s more likely to be the right one. You’ll also give yourself the time to be impulsive: when a bargain does come into your reach, you’ll be able to grab hold of it quickly. For example, you might be in the market for a guitar of a particular make and composition and then wait for one to appear on your Facebook marketplace feed rather than looking for a new one.