Saving Money on Other Purchases
Our pages on Saving Money on Your Phone, Saving Money on Your Car, Saving Money on Food and Groceries, and Saving Money on Household Bills all describe how to make savings in specific areas of your life. However, you can also save money on almost any large purchase, from washing machines through laptops and televisions, to clothes. By applying a few simple rules, you can buy what you need, but not break your budget.
This page sets out some ideas to consider when making any large purchase, and quite possibly smaller ones too. You may even be able to save money on treats that you otherwise would not be able to afford.
Funding Your Purchase
Perhaps the first question, and certainly one of the biggest, is how will you fund your purchase?
This usually boils down to whether you save up until you can afford the purchase outright, or will you borrow the money to pay for it. There may also be a ‘middle ground’, where you save money towards a deposit, and then use credit for the rest.
Odd though it may seem, there is no single answer to this. Sometimes it may make sense to borrow to fund a purchase, and other times it might make more sense to save up until you can afford to buy.
It makes sense to save when:
You already have a lot of debt, and you may struggle to obtain more because you look like a poor risk, or you are already finding it hard to pay the interest and repayments on your debts each month.
You do not need the item immediately and can afford to wait to buy.
You may be able to obtain a discount by paying in cash, rather than taking out credit.
It will cost you less to save up (and get a small amount of interest on your savings) than pay interest on a loan. This also follows when a larger deposit on the purchase may get you a better rate of interest on a loan, for example, with a mortgage.
It makes sense to borrow when:
You need the item immediately and cannot afford to buy it outright. This might happen if your car or boiler has broken down irretrievably, and you need a replacement.
You can obtain interest-free credit for the loan, and you are confident that you will be able to pay it off within the interest-free period. In that case, let your savings earn you interest in the meantime. This might also apply for a very low-interest loan, especially if your savings are invested in something that is giving a better rate of return.
You will get a better deal if you buy now than wait. This might be because the item is in a sale, or there is a price increase expected. However, you need to be confident that the savings you make by buying now outweigh the cost of the loan, in terms of the interest you will pay.
If the item that you are buying is going to increase in value (and cost). This is the case for houses, and even college courses. If you wait, you may end up paying more. However, if you buy now, you will get the benefit of the increase in value, and it could help you to pay off the loan quicker.
Type of Debt Also Matters
It is also worth thinking about what sort of debt you are going to use.
A mortgage is secured against your property, so is usually cheaper. Indeed, any type of secured loan is cheaper—but if you default, you could lose your home.
A credit agreement arranged by the store may be convenient, but it could also be more expensive than arranging a bank loan yourself.
Credit cards can also be an expensive way to buy, especially if you do not pay more than the minimum and the debt keeps increasing.
Our page on Loans and Savings explains more about the different types of loans and their financial implications.
Your decision about how and when to buy could therefore affect the cost of buying. However, there are also other aspects to consider.
What You Buy: Choosing Your Purchase Wisely
The second issue to consider is exactly what you buy, because there are always options.
First, consider whether you need a premium, mid-range or basic product.
On the whole, mid-range is almost always acceptable, and will do the job. With a premium product, you are often paying more for the name than the product quality. However, pay too little, and you may end up with a product whose quality is a bit doubtful, or that does not have all the features that you really need.
Second, check out the model. It is always worth looking for last year’s colours, models or specs.
These are invariably cheaper—and often almost exactly the same as the latest version. This applies to purchases like trainers, as well as white goods and electronic items. The technology on fridges and washing machines is not changing very fast, although this could not be said about computers. However, even there you may find advantages in looking at last year’s model.
You may even be able to get a special deal on a particular item, especially if it is the last one in store, or it is damaged in some way. Scratches on the outside of a fridge do not affect its function—but they may significantly reduce its price.
It may also be worth considering buying a second-hand product.
Cars, for example, lose a huge amount of value in their first two years of life. This makes a two-year-old car much cheaper than a brand new one. However, realistically it could run for ten or even 15 years more without any trouble. Plenty of people buy brand new cars every two years, giving a substantial pool of slightly older cars available.
Similarly, if you need any office furniture, there is a huge second-hand market as a result of businesses refurbishing offices, or hire companies moving stock on after a couple of years.
Furniture like dining tables, wardrobes, and kitchen chairs is also worth seeking out second hand, because it is unlikely to be damaged by use. However, soft furniture like sofas, mattresses and armchairs is less good, because of the likely wear.
Do your homework and check online reviews to reassure yourself that you're planning on buying a good model, our page Understanding and Interpreting Online Product Reviews might help here.
Taking Advantage of Offers and Loyalty Discounts
It is always worth taking advantage of any offers and discounts that you can find.
One of the best ways to save money on any purchase is to buy during the sales.
However much you pursue vouchers and coupons during the rest of the year, you are unlikely to make such big savings as in a seasonal sale. There are huge bargains to be had just after Christmas, especially for items that are often given as gifts. It can even be worth buying gifts for next year, if you find something suitable.
However, it is also worth looking for vouchers, coupons and special offers, especially if they are time limited.
That often means that the retailer wants to get rid of something within a particular time. If you are in the market for that product at that time, it is a win–win situation.
Dedicated coupon and discount shoppers sign up to newsletters from their favourite brands and keep an eye on online sales for things that they know they will need before too long. However, even if you are not that committed, you can still save money by browsing for vouchers or coupon codes before you shop online.
The other area to consider is cashback.
Many bank accounts and credit cards offer cashback on purchases. This might be on all purchases, or only with specific retailers during specific periods. However, keeping an eye on the offers can mean that you get at least a small return on your buying.
Some websites also offer cashback on purchases via affiliate links. You often get the cashback in the form of gift cards—but if those are for stores where you buy regularly, then that is the equivalent of cash.
Retailers’ loyalty cards also often offer rewards that you can spend either in their stores, or with other retailers. This can help you to pay for treats or special purchases.
There are also some ways that you can use or obtain gift cards that may offer some ‘free money’.
Some websites sell on unwanted gift cards, often for less than face value. You may therefore be able to buy a gift card for a retailer or website that you use regularly, or for a one-off purchase, at less than its face value.
Websites and apps hosting consumer surveys and market research often offer gift cards as a reward. You will probably have to complete a LOT of surveys before you qualify for your first gift card. However, if you have time, this can be a great way to supplement your income without having to spend anything at all.
It is always worth doing your home and ‘shopping around’ a bit before buying anything.
However, thanks to price comparison websites and apps, this process is now a whole lot easier. You no longer have to go to every store in town to check the prices. Instead, you can just download an app and spend 10 minutes on it. Some of these apps are specific to certain websites (for example, camelcamelcamel tracks prices at Amazon, and will alert you if something on your wishlist drops into your price range). However, others are more general, and simply compare prices across a list of retailers.
You can use this to find the lowest price for a product you want. However, you can also be a bit more cunning, and use it as proof of price with retailers that offer price match guarantees, especially if their terms and conditions are better (for example, a more flexible returns policy, or free delivery).
The Bottom Line
All these options can be good ways to save money on major purchases such as household appliances or even expensive clothes. You could use just one, or combine several for bigger savings.
The bottom line is that every little helps in making savings on big purchases.