Mark Bouris shares advice on buying big-ticket items wisely

A majority of households are upgrading appliances and other big-ticket items this year. Here’s how to avoid being burnt financially.

Two-thirds of Australians are planning to buy a big-ticket household item, and are being urged to avoid the mistakes that can damage their finances.

A new study from buy now, pay later platform Gimmie found 66 per cent of consumers say they will make a large household purchase this year, and for young families this rises to 71 per cent.

Financial services and advice company Yellow Brick Road’s executive chairman, Mark Bouris, says big ticket items “seem to be the story of the moment” but many people don’t have the money on hand to spend.

Yellow Brick Road executive chairman Mark Bouris says first work out the pros and cons.

COMPARE PRICES AND ITEMS

They often turn to credit cards, and increasingly buy now, pay later services, but Bouris says their first step should be making time to sit down and research their options and products.

“If you don’t make time for it, you’ll never find out if there is an option out there that’s better suited to you,” he says.

“While we don’t want to put our lives on hold for two weeks while we weigh up the pros and cons of different options, we also don’t want to pick the worst option of the bunch because we weren’t paying attention.”

Compare your options with a “typical pros and cons approach”, Bouris says.

Once you’ve worked out what you need, next work out what you can spend.

ASK YOURSELF WHY

“Through this process, it’s so important to ask the question ‘why?’,” Bouris says.

“In a world where patience is almost non-existent, we’ve almost become conditioned to take things at face value. That’s why it’s so important to interrogate everything and explore what else is out there.”

Spending $1000 or more on a household purchase should naturally require more rigour than buying a pair of socks, yet many people feel rushed into buying appliances because one breaks down.

Sort My Money founder David Rankin says when buying big ticket items it’s more important than ever to distinguish between needs and wants.

“There’s a lot of social pressure and people feel they have to keep up with the Joneses – that’s the time to sit back and ask if you really need this or want this,” he says.

It’s important to ask yourself what you can afford. Picture: iStock.

AFFORDABILITY CHECK

Rankin says consumers should examine their finances, ask how affordable the item is and whether they can make savings elsewhere to offset the cost or repayments.

He says while there are zero-interest finance offers available, it’s not a recommended route for those who might miss repayments.

“Be aware of what the repayments will be – you have to keep up, otherwise you are going to be slugged extra fees or interest,” Rankin says.

“Buy now, pay later is getting used for a lot of this – it’s often a sign that maybe it’s not affordable now.”

“Don’t just buy from the first retailer you speak to – there has never been more competition for your dollar, so make sure you do your research and get the best deal out there.”

WRITE IT DOWN

Bouris says the best way to manage and understand household finances around big ticket purchases is to write it down.

“We can get all the numbers we need to know from our phones or online through our bank, but if you just see it on a screen it won’t mean much to you,” he says.

“When you write it down, like physically writing it down on a piece of paper, you’re committing the information to your mind, and giving your brain time to reinterpret and better understand the information.”

Sort My Money founder David Rankin says don’t buy from the first retailer you visit.

PURCHASING TRAPS

Beware of these potential pitfalls:

• Confusing finance contracts for big household purchases

• Pressure to purchase immediately.

• Accruing more consumer debt before paying off the last lot.

• Not having financial discipline and routines.

• Failing to check the fine print.