3 Tips for Affording the Next Big Purchase

Good things may come to those who wait, but even better things come to those who plan. If you’re looking forward to making a big purchase, it’s smart to take steps to make it more affordable. That way, you can enjoy your purchase more and worry less about what it costs to make it.

The prospect of buying a new car, cutting-edge technology, a home, or a dream vacation is exciting. But beware getting ahead of your financial self. Your investment may take time, patience, and sacrifice. Here are three tips for affording the next big purchase on your vision board.

1. Raise Your Credit Score

For most people, major purchases require using someone else’s money, like a loan, mortgage, or credit card. With any of them, you’ll be paying interest for the privilege. Financing approval and the interest rate will hinge on your credit score.

In advance of your purchase, start moving strategically to raise your score or establish it if you don’t have one. Of course, you have to use credit to create or build a score. Be careful that you don’t bring your score down by overusing approved limits or failing to make timely payments.

You can begin building a credit history and raising your score with less risk by using a credit builder card. You establish a credit limit by securing that amount with cash, which should keep you from overextending yourself. Pay balances in full and on time every month to build a stellar credit history.

If you’re carrying a balance on a traditional credit card, pay as much as you can monthly to pay it off. Of course, you’ll need to stop using that card for purchases, or you won’t see the balance disappear very quickly. This will require that you curtail your spending habits.

Always remember to keep your eye on the prize. That will make forgoing a lot of unnecessary expenditures well worth the sacrifice. Envision the bigger payoff instead.

2. Stick to a Budget

Smart major buys require preparation, and a budget is the best tool you can use to do that. If you don’t already have a budget, create one. If you do have one, it will likely need some adjusting to reach your purchasing goal.

The basis of your budget will be those expenses you have to make. They include such things as rent, insurance, groceries, and that student loan repayment. You should also include contributions to a savings account and to retirement plans as necessary expenses.

Once those are plugged in, look at the income you have left and your revolving debt, like credit cards. Budget the maximum payments possible on that debt to lower it as quickly as you can. That will help position you for the big purchase you want to make.

Make sure you budget some cash from each paycheck for unexpected expenses and a little fun. For sure you need to reduce frivolous spending to afford a major purchase. But that doesn’t mean you can’t enjoy yourself a bit now and again.

Having a budget will keep you on track for reaching your goal. It provides a compelling visual for monitoring your progress over time. With a budget in charge of telling your money where to go, you won’t be left puzzled by where it all disappeared.

3. Wait for It

There are three great reasons for exercising purchasing patience. First, it gives you time to make sure it’s a leap you want to take. Second, it improves your financial readiness, and third, it might yield a better deal.

When something bright and shiny hits the market, you might set your sights on buying it. But as you watch the market and it becomes more ubiquitous, you could find yourself having second thoughts. The latest thing may not be as wonderful as the previous thing, and that could result in a smarter purchase.  

Waiting also gives you time to put yourself in the best financial position possible prior to purchase. You have time to push your credit score up and your debt down. One year of smart moves can make a huge difference in your financial position.

Big, bright, and shiny things also eventually go on sale or come with better financing options. You probably take advantage of this concept when you need to upgrade your cell phone. The same concept applies to larger items.

Patience is a virtue, particularly when considering your next major buy. Your resolve and comfort level will improve with time, so take all of that you need. That big purchase will be there when you’re truly ready to make it.

Go for It

It’s OK to want some of the finer things in life. You work hard hoping to position yourself to buy a big-ticket item or two. But without a few other smart moves, you won’t be able to make those purchases — or you may regret them later.

Building a great credit score, adhering to a budget, and timing the purchase perfectly are wise decisions. You’ll be able to live with your choice and your big purchase happily. Once you do,  you can start planning for your next one.