Big-Ticket Items: What should you consider?

Big-Ticket Items: What To Consider?

Last Updated on November 8, 2022

TL;DR – Before buying big-ticket items, particularly a house or car, you’ll need to consider the reason behind the purchase. You also need to look into the lifestyle changes it will affect, how you will finance it, and identify if it is the best time to buy.


As you finally enter adulthood, you will find yourself wanting to buy big-ticket items for yourself and your family, especially once you see your peers doing the same. 

However, many reasons behind a purchase need careful consideration before plunging in.

So, before buying your first, second, or succeeding big-ticket items, there are things that require careful consideration and planning. So don’t be in such a hurry.

Disclaimer: I am not an expert. I wrote mainly from my personal experience and learnings, conversations, and research about big-ticket items. If you need further information, please talk to your trusted professional.

Related: 5 New Status Symbols For Millennials

What are big-ticket items?

a car and a house are common big-ticket items
Photo by Kam Pratt on Pexels.com

Big-ticket items are major or expensive purchases that may require a lot of cash. The most common big-ticket items are houses and lots, cars, expensive furniture and appliances, and other similar items.

Some significant purchases, especially a house, a lot, or a car, may require external financing and will tie you to a loan for a long time. So, before buying a big-ticket item, you may look into some of these considerations.

1. Why do you intend to buy this big-ticket item?

In every decision, especially a major financial decision, you first need to establish the reason behind the purchase. It may even require consulting with your partner or your family.

For instance, we know that we, Filipinos, look at a house or a car as an excellent investment and a status symbol signifying success. But if your main reason is about status, without carefully looking at the pros and cons of the purchase, you may be trapped in the rat race for a long time.

I know many people who buy big-ticket items and finance them through long-term loans, which often strangle them in a job they hate because they can’t afford to lose a source of income.

Sadly, some people buy big-ticket items even if they don’t need them and can’t afford them yet. I found this happening to some entry-level employees. They take out loans to buy houses or cars with their current salary, where almost nothing is left – leading to a debt cycle.

Another example is the shared experience of OFWs in buying a house in the Philippines while working abroad for several more years. They intend to buy it as an investment and proof of their hard work.

However, suppose the house you’re building is for your family’s use. In that case, it can’t be considered an investment since you will not earn any income from it.

An apartment or a rental property is better if you intend to stop working abroad soon since it will generate a passive income once you return home permanently.

So be clear on your why. Never buy a big-ticket item based on emotion or peer pressure because you will only have a hard time, and your finances may suffer.

Related: Absolute Beginner’s Guide to Passive Income

2. Are you ready for the lifestyle and budgeting changes of buying a big-ticket item?

Buying a big-ticket item, especially a house or a car drastically changes your lifestyle.

For instance, if you buy a new car, you must consider parking. So, if you’re currently renting in Metro Manila, you must consider a parking lot aside from your apartment preferences.

You will also need to consider the added costs of owning a car, like gas, maintenance, registrations, parking, and toll, to your current budget.

Some young people buy a car with their entry-level income. Then when the cost of gas increases or they discover the cost of parking and toll and don’t have the money for it, they revert to commuting.

Another example is with houses. Typically, the cheaper townhouses near Metro Manila are located in the nearby provinces of Rizal, Laguna, Bulacan, or Cavite.

So, if you buy a house outside the metro, then you should also consider the added expenses and stress of transportation.

A farther housing location may even prompt you to buy a car along with your new house. If this happens, you will also increase your monthly expenses in the financing, especially if you took out a loan for both.

3. How do you plan on financing this big-ticket purchase?

Another primary consideration when buying a big-ticket item is how you’ll pay for it. Do you plan to take out a loan or buy it in cash?

Again, the most significant purchases you can make are a house and a car. So they usually cost a hefty amount, making the usual route to buying them through financing and loans.

However, before you can take out a loan, the bank or the lending institution will need to look at your current income, your credit history, and your capacity to pay and may also require a co-maker or guarantor before approving you for a loan.

4. Is it the right time to buy this big-ticket item?

So you have the right reasons behind the purchase, are prepared for the incoming lifestyle changes, and have the money or financing required to pay for it. Now, your next consideration is the timing.

Though this is not as big of an issue when buying a car, it is a significant consideration when buying a house, especially for singles and unmarried couples.

If you’re single and plan to stay that way, then the decision to buy a house can be justified. However, if you’re single but in a committed relationship, you should consult your partner about this decision.

There are many instances when unmarried couples decide to buy a house, break up, scrap their plan for the home, and divide the spoils. So, it is still best for couples to get married before deciding to buy a house.

Another consideration for the timing of buying a big-ticket item is the current interest rate. The interest rates are set by the central bank or the Bangko Sentral ng Pilipinas during times when inflation is high.

Theoretically, central banks increase the interest rate to curb inflation by discouraging companies and people from spending and borrowing money while encouraging them to save.

So, purchasing your big-ticket items will be more expensive if you plan on a loan for a new house or a car during a high-interest rate season.

5. Put your plan on paper.

Finally, when considering the first four, you must put your action plan on paper, not just on your mind. Writing your goal in black and white is essential, so you will have more focus and motivation to do it.

It is also essential to see if the numbers are adding up because if you realize that you’ll have to pay a high-interest rate for a long time, you may reconsider other options.

For example, if you realize that you don’t have enough savings or salary to be approved for a loan upon completing your action plan, you may consider renting first while also saving more. You may even try looking for a higher-paying job.

Another is if you’re planning to buy a car but don’t have enough money for the down payment or the price is just too expensive. In this case, you may consider purchasing a second-hand car.

Buying a relatively new but second-hand car from a reputable seller may save you a lot since a new car loses 15 – 20% of its value in its first year. So it is a logical choice to make.

Final Thought

Buying big-ticket items are some of the goals of many young adults because it validates their hard work and realizes their dreams for their family.

However, since these purchases are usually expensive, you will have to consider many things and not be too emotional or excited to own a new house or car.

Remember, these purchase is a major life decision which affects many aspects of your life, especially your financial stability.

You also need to pray for it and ask for God’s wisdom when deciding on major life choices.

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