22 January, 2018 - 09:21 AM GMT

How to plan for a big purchase

If you’ve decided to upgrade to a new car or buy a house, then it’s easy to feel overwhelmed by the figure and long journey facing you to pay it off. However, with a few simple steps you can prepare for a big purchase for your family which will reduce stress and help you make the best choice to save both time and money.

Think about how this purchase will fit into your budget
In most cases people don’t usually have the entire cash deposit needed to make the purchase they want straight away so you need to consider how you will pay off the loan/debt in instalments over time.

Ask yourself these three questions:

  1. Will this work with your personal set of circumstances?
  2. Will you have to make financial sacrifices elsewhere you’ll be ok with?
  3. Will you be able to manage the repayments without getting yourself into further debt?

It is important to ensure that you are only buying what you can afford.

Set a goal and figure out how much you need to regularly save
Consider how many weeks, months or years you’ll need to work before you’ll save up enough for your big purchase. How much do you need to put aside each week? Don’t forget the item may rise a little in price by the time you buy it.
Put these regular contributions/deductions into a savings account with an automated savings tool and a personalised savings goal. This will also help you monitor your progress and allow you to make adjustments according to how the goal is tracking. You could also use ASIC’s savings goal calculator to get you started.

Do your research to get the best possible deal
Take your time to look around and don’t rush a big purchase. It can be easy to be swept up in the excitement about a potential new house or car. But it is important to stay rational.

Talk to industry experts. If you’re buying property, check what month you’ll get the best deals. The most expensive months to buy property in our two biggest capital cities are surprisingly in winter. In fact Sydney and Melbourne real estate’s most expensive month is July. During this time you may get as much as 3.2 per cent more for you sale.

Other cities differ with Darwin, Perth, Adelaide, Hobart, Canberra and Brisbane having their most expensive months during the warmer months in the year. The average sale prices for Brisbane during summer and spring are between 0.8 and 5.95 per cent higher during this period so it’s important to check on trends and use them to your advantage.

Consider the investment rewards
When making a  big purchase you’ll need to consider how to get the most out of your investment. If you are buying property then you can raise your chances of securing a good long-term investment by researching the growth of a particular area and strategically buying a house there.

If you’re buying a car then you’ll need to check on things such as quality and price, check safety ratings and also compare car brands. You can save some money by choosing a brand that has parts available locally rather than having to ship them in from overseas.

Make the most of your investment and protect it

Big-ticket items often come with great warranty options and service or insurance plans. Make sure you give these choices the attention they deserve. Educate yourself about the policies and protection available, compare quotes, and confirm what your investment options are before making any big purchase. This will allow you the time to consider all the options available and make an informed decision rather than being pressured into a choice at the moment of purchase.