Spending

34% of shoppers consider a large purchase anything over $250 — how to buy something just out of your budget

"You need to know what is going to be the genesis for raising that capital."

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When it comes to large purchases, Americans are showing they like to think ahead. Two out of three shoppers say they spend more time planning a large purchase than they do paying it off, according to a Wallethub survey.

For 34% of respondents, a large purchase was anything that cost more than $250 and for 24% of respondents a large purchase was anything that cost more than $100.

Before putting a large purchase on your credit card, be honest with yourself about your history with debt, says Kevin Mahoney, CFP, founder of Illumint in Washington, D.C

"Anyone who feels nervous about using a credit card or has past experiences with credit cards that didn't go so well, then it's not worth the potential risk and trouble putting it on the credit card because that can open up a whole set of issues that might be regrettable in the future," he says.

Even if your purchase has a "buy now, pay later" option, you might incur some late fees if you don't make payments on time, something 36% of users admitted to doing, according to a Breeze Survey of 1,500 Americans taken from January 4 to January 7.

If you're saving up for a pricey pair of shoes, a new TV, a trip, or any other purchase you want to pay for in full, here's a 3-step spending plan that could help.

1. Decide where the money will come from

Everyone has a spending plan, says Mark La Spisa, a CFP and president of Vermillion Financial Advisors in South Barrington, Illinois. Even if the plan is simply "I spend what I have," that's still represents some parameters you've put on your spending.

If you're saving up for a larger purchase, look at your spending and see where the money is going to come from. Decide whether you want to get the money by earning more or spending less.

"Are you going to work a couple extra hours and have a side hustle, or are you going to reduce spending somewhere else?" he says. "Are you going to go to Starbucks three times a week instead of five times a week? You need to know what is going to be the genesis for raising that capital."

Are you going to work a couple extra hours and have a side hustle, or are you going to reduce spending somewhere else?
Mark La Spisa

You might be able to cut spending from your budget in unexpected, significant ways, Mahoney says, if you look at your bank statements and see where exactly your paycheck is going.

"You can probably identify one or more things that you are spending money on with some consistency that doesn't bring you a lot of value," he says. "If you can recognize that, then you have a great opportunity to transfer those dollars from a habitual purchase that doesn't get you much to this other thing."

2. Automate your savings

If you're stashing money away in a savings account to make this purchase, automate those transfers, La Spisa says.

"If you don't automate it you fall to the whims of the day and what's going on and your own personal demons when it comes to cash flow," he says.

Let's say you're an emotional spender, he says. Leaving it up to your mood whether you want to buy something today for $50 or transfer that $50 into savings could lead you to doing the former. Automating contributions ensures you are saving no matter what.

3. Visualize your goal

Picture your goal in your mind, and even maybe make a physical representation of it, so you are reminded of why you're cutting down on buying lattes or why you're taking on those few extra hours of work. That can help keep you focused and motivated.

"Having a picture of it and putting it on their fridge or bathroom, and having the date you are going to buy it, is going to help you over the goal line," La Spisa says.

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