Making a major purchase can be exciting or necessary, but it is also an expenditure that can get you in financial trouble, particularly if you don’t properly plan for the purchase. Let’s say you want to buy your first car or you know your roof will need to be fixed over the next year or so. What are the steps or things you can do to ensure you don’t find yourself in a financial jam down the line?
First of all, establish a monthly budget. Do you have a surplus, meaning more monthly income after tax dollars than your monthly expenses? Let’s say you do, about $300 per month. If you set aside that amount per month, by the end of the year you’ll have saved up $3,600. This amount could be a decent down payment on a car, which would lower your monthly payments. Depending on the repairs needed for your proverbial roof, this amount may even be enough to pay off the job in full.
Secondly, do your research. Try and figure out what it is you want (car) or need (repairs to the roof). See how much these things cost. Look at different dealerships in and out of your area – you might be surprised by how much you can save just by driving a bit out of the way for the purchase. For a home renovation project like roof repairs, get 2 to 3 different quotes. Ask your friends for recommendations and look at Better Business Bureaus or online reviews to help make your final purchasing decision.
Thirdly, be patient until you have the money to make your purchase or down payment. If possible, prioritize needs over wants (i.e. the roof repair is probably more urgent than upgrading your car). Avoid impulse buys until you’re certain you have the funds to cover your costs.
Finally, take the time to feel good that you planned your purchase out and have achieved your goal of buying something without incurring debt.
These steps are simple, but it takes planning, self-control and patience to apply them properly and consistently. Once you get into this habit, you will be amazed at how easy it really is to budget and control your spending.
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