How to Budget

April 1, 2020

10 Costs to Consider Before Buying Something Expensive

By Priya

April 1, 2020

Have you ever bought something that ended up costing you a lot more than you expected? When you look at the price tag, you might think an item fits within your budget. However, there are many other costs you need to consider before buying something, especially something expensive. It’ll also help you decide which options are more economical – you’ll end up making better financial decisions.

If you’re not budgeting for all relevant costs of buying something, you’re misjudging your ability to afford the item. You end up buying something you don’t have the budget for. This can destroy your budget and force you to rely on credit cards (which is against the rules around here!). Instead, when you’re aware of all the costs involved, you can save up to purchase the item debt free.

To make sure I wasn’t blindsided by extra costs, I created a checklist to help me budget better. Use this free printable worksheet to compare options, plan your purchases & help you decide which option is better for your budget. You need to budget for more than just the cost on the price tag of the item. There are many costs involved in owning and running a lot of the things we buy.

The actual sticker price of the item

The first and most obvious cost you should consider is the actual sticker price. This should include any VAT (Value Added Tax like the GST) on the item. If the item comes in separate parts which are individually priced, make sure you’re including the cost of all the relevant parts.

Mr Bear and I were shopping for a new couch earlier this year, which meant multiple trips to IKEA. The cushions and couch frame are priced separately, even though you can’t have a complete couch without both pieces. Thankfully, IKEA clearly states the total cost of the couch as the sticker price – not all vendors will.

Costs for storing or displaying the item in your space

You should consider any storage costs that come along with your new purchase. I’m planning on buying a new computer soon, which also means I need somewhere to put it. I don’t currently have a desk or a desk chair but I won’t be able to use my computer without them.

I’ll need a desk to put my computer on and a chair to sit at my desk. Both of these costs are included in the budget for my new computer. Further, I also need storage shelves for all my equipment and filing.

Maintenance costs

These are the costs to keep your things working properly and in good condition. They’re especially relevant for large purchases like cars, which need regular maintenance to keep them safe and running properly.

However, it also applies to smaller everyday purchases. For example, if you buy a pair of suede boots, you’ll also need to buy a weather protectant spray along with it. Otherwise, you’d risk ruining your new boots and might even avoid wearing them.

Ongoing usage costs

This category applies to things like usage of water and electricity for home appliances, and fuel for cars. The more energy and water efficient your appliances are, the lower the usage or running costs will be.

We purchased our current fridge second-hand to keep costs low. It’s a bit too big for our family of two and isn’t very energy efficient. Mr Bear and I are planning on buying a new fridge sometime soon.

We’ll be looking for something that’s the right size and has the highest energy efficiency rating for our budget. This will help keep the energy usage costs low.

Repair costs

Always compare the cost of repairing something with the cost of buying a new one. If the cost of repairs will be as much (or more) than the cost of replacement, it doesn’t make financial sense to repair the broken item.

I always include a car repair fund as part of my finances. Cars are expensive and not particularly affordable (or easy) to replace. It needs to be repaired. In fact, repair costs are often one of the highest costs that need to be considered before buying something expensive.

Usually, the more expensive an item is, the harder it is to replace. But if you’re going to be making multiple repairs, the cost will add up. If you’re able to make the repairs yourself, you can significantly reduce the cost. When buttons would fly off my clothes, I would take them to my mum to put them back on for me. I’ve since learned to do it myself by watching her.

It’s also worth noting that sometimes, higher quality items are less likely to break and need repairs. These items are more expensive upfront, but may cost you less in repairs over time and last longer before needing replacement. It’s the idea of “buy cheap, buy twice”.

Having said that though, premium items are not always better, so you should always do your research.

Repeat consumable purchases

Think of things like batteries in a new device or ink in a printer. You may have the budget to buy the printer, but if you can’t afford the ink on an ongoing basis, your printer will be nothing more than a dust-collecting paperweight.

These are generally not the most expensive products, but you’ll be buying them more than once. It’s one of the sometimes hidden costs to consider before buying something expensive. When shopping for consumables like a new shampoo and conditioner, I think of how much it’ll cost me to replace the empty bottles and keep using the products for an entire year.

This same logic applies to any recurring charges or subscription-based costs. My Netflix isn’t just $12 for a month, it’s $12 every month and that needs to be factored into my budget.

Insurance / warranty

Insurance costs are an ongoing cost that will mostly apply to big ticket items. You might pay for insurance as a recurring bill each month, or as an annual lump sum. Either way, ongoing insurance costs should be included in your budget.

You’ll also need to include any additional or extended warranty costs you want along with your new items. A word of caution here – you should always compare whether or not extended warranty is worth it.

It may make more financial sense for you to repair the item yourself or from a third-party provider. Or, you might just replace the item. If extended warranty is right for you, however, it needs to be included in your budget.

Shipping, handling & delivery costs

I love online shopping. I get to shop from the comfort of my own home and take my time looking around. And don’t pretend you don’t love shopping in your undies! It also means I can very easily compare prices and benefits of all available options. “Shopping around” is so much easier when all it takes is to open another tab in your browser.

As much as I love online shopping, though, I hate – HATE – paying for shipping. I’d rather wait until I have lots to buy and take advantage of free shipping offers than buy something now with a few dollars of shipping.

If that isn’t possible, though, I always include the cost of shipping into my budget for the item I’m buying. This is especially important if you’re buying from overseas, as international shipping costs can be ridiculously high. Therefore, you should definitely consider shipping costs before buying something expensive, especially if it’s heavy (as shipping rates are often based on weight).

VAT / GST and import taxes

Wherever you’re shopping, you should always be aware of how much VAT/GST is charged. Check that prices quoted on stickers or online are inclusive of these costs. If not, you’ll need to whip out your phone and calculate it on the spot. You don’t want to be surprised at checkout when your cart is 10% more expensive than you thought it was.

For a 10% GST rate, multiply the price excluding GST by 1.1 to calculate the price including GST. For example, a book for $5 excluding GST should be multiplied by 1.1, resulting in a price including GST of $5.50. That’s the price you’ll pay and will need to budget for.

If you’re shopping online from international retailers, you’ll also need to pay GST in Australia. Any relevant import duties and taxes should also be included in your budget.

Installation, assembly & setup

If you can DIY, then that’s great! I’m terrible at DIY-ing this stuff, but luckily, Mr Bear isn’t. To keep costs low, you should DIY whenever you’re able to or ask a friend to help you. However, there are some items that you’ll need an expert to install for you. Any costs like this should always be considered in your budget.

How does this work in your budget?

Now that you’re aware of the kind of costs you need to consider, let’s go through an example of how this might look in your budget.

Let’s say you want to buy a new printer. You’ve been doing some research and have narrowed it down to two options: printer A or printer B. We’re going to analyse both options to see which one will be cheaper to own and use for 12 months.

10 Costs to Consider Before You Buy Something Expensive

You can see from this example that while printer B is more expensive upfront, it has lower ongoing costs. This means that it’ll be cheaper to use than printer A. See how it all works? Remember to download your free worksheet to apply what you’ve learned in this blog post.


Considering all the costs involved before buying anything expensive is crucial to making sure your budget can really afford it. I’ve created a free printable worksheet which you can download and use anytime you’re making a large purchase.

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