-By Darren Smith & Angela Boot

When it comes to managing our finances the impact of the larger spend items can be significant. If they are planned, well thought out, and connected to our goals and purpose they can have a very positive impact on our lifestyle and wellbeing. If they are not the opposite can happen, they can turn into a driver of financial stress.

Depending on how they have been funded they can come with a loan that might long outlast the benefit of the purchase. Of course, there is also the unplanned large expenses that we need to contend with that bring extra stress and pressure. Examples could be connected to personal health events or repairs to an asset that we might own.

Many people focus on changes in behavior and approach with smaller purchases but don’t put enough time into larger commitments. Examples of what might fall into the larger spends could be the new car, boat, caravan, kitchen , accommodation or housing, investment or even a big holiday. For the purpose of this article let’s classify larger items as purchases that are over $50,000. 

Sometimes it is possible to get caught up in the emotions of the purchase and add on the extra bells and whistles. Whilst this might be appealing at purchase time it can often lead to buyers’ remorse when the shine starts to come off.

The way we manage our money can have a direct impact on our happiness. It is much more than getting a short hit of happiness in the initial joy of the moment.

I recently was discussing this issue with one of our specialist advisers, Angela Boot who is based on the Sunshine Coast. Angela highlighted some of the questions she asks when people are considering large purchases.

The core of the questioning was around the following areas:

• Have you thought this through?

• How will you fund this – with your own funds or other peoples?

• What impact will this have on your lifestyle now and in the future?

• If your circumstances change what will be your ability to sell it and receive value?

• Are there alternative ways to achieve the same thing without purchasing it?

These are great questions to consider in preparation for a purchase.

Some additional tips to consider are:

1. Consider how important this is to you

2. Take time, do your research and always ask for a better deal

3. Use time as your friend – if you find something that fits give yourself 48 hours to reflect

4. Consider how this purchase will make you feel now and in 12 months down the track

5. Try before you buy - what are the options?.

6. Consider buying second hand where you don’t pay the premium for brand new

7. Consider leasing for a short period again to make sure it is something that will be used

8. Ideally save for it or use your own funds and avoid getting credit

9. If you do need to borrow have a plan, know the costs and do your research

10. Understand the impact this purchase will have on other goals and your need to keep working

In an environment with rising interest rates, higher costs of living and increased uncertainty these decisions are very important. Of course, we live in a world where sometimes we are making the purchase for someone else’s benefit, perhaps a relative. Similar questions should be applied.

Again, the point of this piece is not to judge or say you shouldn’t make large purchases with your hard earned savings. It is about making sure you make an informed purchase that you can live with that will bring you happiness over the longer term. For some who have accumulated wealth it is about having the confidence that they can spend some capital on those items that are really important to them.

I am sure we all have experiences either directly or indirectly where we have made the purchase and have some regrets. These prompts are to there to help reduce the intensity of that regret by having a process. 

As we go through life and we have more capacity it is nice to spoil ourselves and reap the benefits of our hard work. However, the value of social connections, friendships and having a sense of purpose sometimes brings more value than the materialistic things. This is another thing to consider when making these purchases. Is the purchase desire coming from a void that could be filled in other ways? If we can achieve a balance through our purchasing habits we are more likely to be satisfied long term.