At some point in your life, you'll probably make a "big" purchase (even if it's as small as a computer). Hopefully, you'll be able to look at your cash flow and make a plan to afford that item—but that's not always realistic. Sometimes, you need that big-ticket item right now. Other times, it simply feels that way.
The trick is to not spend yourself into the red because of a few expensive items. To avoid doing this, consider both your finances and your emotions before you make any big purchase—whether it's a computer, car, or anything else that will potentially bust your budget.
While most of your needs, like food and clothing, are relatively low in cost, some big purchases are unavoidable—you need medical treatment to stay healthy, or you need your car to get you to and from your job. Affording items like these is one reason you put money in savings or an emergency fund.
But then there are large expenses that are wants, not needs—like a new phone or high-priced furniture. You should approach these critically to decide if they make sense. Remember: Even if an item is functional, like a new bed, that doesn't automatically make it a practical purchase.
First, ask yourself, "Can my current income support this?" If you've been saving up money specifically for the item, you're set. But that won't always be the case. If it's not, determine whether the amount in your bank account can cover this purchase and your bills, rent, and groceries.
If it won't—and you plan to charge or finance the purchase—think about how much debt you already have and whether you can afford to add to it. Still ready to make the purchase? Then figure out how it will change your monthly budget, as you'll want to allocate more money to paying off that larger debt.
Make sure you think about these considerations before you go to the store or website—the last thing you want is to make an impulse purchase. Taking time to think about the cost and your current financial standing will help you avoid that misstep.
After you go over the finances, an easy way to ensure a purchase makes sense is to examine practical concerns. If you're thinking about buying a piece of art or furniture, ask yourself where it would go in your apartment or if it would even fit. If you're looking at an expensive dress or suit, figure out if you'd have an actual occasion to wear it. If it's a car or a scooter, make sure you can park it near your home, that you'll have reason to use it, and that you can pay for its upkeep.
Some of these may seem like small concerns, but when you're dealing with large amounts of money, you want to approach the decision from all angles. Even a small strike against making the purchase could make all the difference.
Know Your Emotions
Money isn't the only factor in these situations—after all, if people only purchased things when it made sense financially, no one would rack up astronomical credit card debt. So, if you feel the urge to buy a flat-screen TV even though your current set works just fine, take a look at the emotions behind your desire to buy it.
Because there can be a strong psychological aspect to spending large amounts of money, you want to know you're buying for the right reasons. When you feel the impulse to make an expensive purchase, never follow through immediately. For some people, shopping is a way to improve a bad mood, cover up anxieties, or reward themselves for an accomplishment—all without concern for the cost and the consequences.
To avoid a rash decision that could seriously hurt your bank account, step back when you feel the push to purchase. It even helps to write down the impulse and examine your current emotional state. Not only will this put space between the initial feeling and the act, but it will also give you a chance to understand why you want to buy the item you have your eye on.
One of the perks of mastering your finances is having the resources to splurge every now and then. But when more and more digits show up on the price tag, you want to be careful—it's no use buying an awesome new computer if you can't pay the electric bill. By taking the time to consider the financial, practical, and emotional implications of your purchase before you take the plunge, you'll be able to spend on yourself while avoiding both the guilt and the debt.