Are You Going Past Your Budget? 5 Questions to Ask Yourself
Early and late Millennials are at a critical point in their lives where they have to invest in expensive and long-term purchases. Instead of saving up for gadgets and clothing, their expenses will now include insurance premiums, car loans, and mortgages. If you want to work toward your economic sustainability in the future, you should be making high-value purchases.
Before You Commit to a High-Value Purchase
High-value purchases usually last for several months to years before you can pay them off in full. Although you can technically pay some of these items with your current budget, it’s vital to assess your financial needs in the long term. Doing so ensures that you’re not overspending on one aspect of your life and letting go of other essential needs.
Before you sign up for a large expense, here are five questions you should ask yourself:
1. Do You Really Need to Purchase It?
High-value purchases can range from the luxurious to the essential, depending on what your lifestyle is like. Ask yourself what benefits these purchases will bring. Generally, buying homes or cars have the practical purpose of addressing your needs. Besides a means of transportation or a house to live in, other useful benefits like long-term savings from commutes and strategic housing locations are advantages. Keep this in mind with other purchases that may not seem urgent for now.
2. Do You Need it Brand New?
Although it can be tempting to buy the latest products in the market, it’s important to understand the value of urgency. Most high-value purchases can drop down in price quickly after the first two weeks of release. This applies to smartphones, flatscreen TVs, refrigerators, and even automobiles. Sometimes, it pays to stay behind trends to work with a better price tag. If an older used model can meet your needs, you don’t have to be in a rush to purchase new releases, especially not brand new ones.
3. Do You Have Enough Cash to Purchase the Item?
Although it might seem odd to ask, paying for cash or credit has long-term consequences to your credit score and finances. On the one hand, paying for an item in cash reduces your net expenses. On the other, paying it off in installments can help paint a better picture of your credit. Weigh the values of both and choose which option suits you better.
4. Are There Sales or Discounts You Can Take Advantage of?
It’s not uncommon for manufacturers and retailers to have sales during seasonal holidays. Sometimes, waiting for a few weeks for a themed sale can be an excellent way to save on your projected expenses. For this reason, consider upcoming holidays before you give in to the urge to purchase something.
5. Have You Done Your Due Diligence?
When purchasing a high-value item, you should do all the research you need to see if it’s a truly valuable purchase. This includes comparing products from similar brands and reading customer testimonials or online reviews. The more informed you are about the product, the easier it will be to make objective decisions as a consumer.
The financial commitments you choose now will have long-term implications on your economic sustainability in the future. Even small yet frequent purchases can lead to a significant sum in your books. This is why it’s necessary to do your due diligence by getting credible advice from financial experts before making a high-value purchase.
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