Dreaming of owning a car, an HDB flat, or even a private apartment? We’ve all been there. And while some of us get to live their dreams, some are still going towards it and making it happen.
You see, big purchases like these are exciting milestones, but they require careful planning. Without a smart financial strategy, these dreams can turn into a source of stress. This guide will help you take practical steps to prepare for your next big purchase so that it’s a smooth and rewarding experience!
Estimate the cost
The first step is understanding how much your dream purchase will cost. With prices fluctuating due to inflation and market trends, it’s crucial to get an accurate estimate.
For instance, the average price of a new car in Singapore like the Mazda 3 is now around $170,000 due to rising COE prices. Meanwhile, the cost of an HDB resale flat hit a record high in 2023, averaging $530,000 for a four-room unit.
To get started:
- Use price comparison tools to check the current market rates for your desired car or property.
- Factor in additional costs such as taxes, maintenance, and insurance. For example, car buyers should consider COE, road tax, and servicing fees, while homeowners must budget for legal fees and renovation costs.
Having a clear picture of the total cost will help you plan your savings and financing effectively. To do this effectively, it is highly recommended to use financial tools or platforms for easier and manageable planning.
Save for the deposit
Saving for a deposit is one of the biggest hurdles for most buyers. For a condominium, you’ll typically need 25% of the purchase price as a down payment. That means saving $200,000 for a $800,000 condo.
For cars, upfront costs like the down payment and registration fees can amount to 30–40% of the car’s price.
Here’s how to save effectively:
- Set up an automatic transfer to a dedicated savings account each month.
- Aim for at least 20% of your monthly income to go toward your big purchase fund.
- Cut back on unnecessary expenses like dining out or luxury shopping.
Using a budgeting calculator or apps can also help you track your expenses, analyze spending habits, and create tailored savings plans.
Choose the right credit card
If your purchase involves recurring costs like groceries, fuel, or public transport, using the right credit card can help you save even more. Cashback and reward programs are a great way to stretch your dollar.
What to look for:
- Cards offering cashback on everyday expenses like groceries and fuel.
- Travel rewards if you’re planning a car purchase and long-distance commutes.
- Low-interest cards for balance transfers if you need to manage payments.
Final thoughts
Planning financially for your next big purchase is all about small, consistent steps. Start by estimating costs, saving diligently, and making smarter spending decisions. With proper preparation, you can achieve your dream purchase without breaking the bank.