Picture: THINKSTOCK
Picture: THINKSTOCK

When it comes to buying big-ticket items like a house or a car, we've been conditioned to believe that having a great credit score is the most important aspect of getting finance for these purchases.

Too often, though, people forget the importance of having sufficient savings to cover the deposit and other upfront costs.

If you're planning to buy a car or a house, the most important part of the transaction is prioritising your savings to ensure that you can put down a large enough deposit. There's no need to get store accounts and max them outto build your credit profile.

Preparing for car or home ownership can be a good way to learn to adjust your lifestyle to accommodate the extra cost.

The first thing you need to do is look at your spending and draw up a comprehensive budget. You'll discover that what you think you can afford to pay is very different to what you can actually pay. Budgeting will give you a realistic picture of, for example, the size of the car payments you can afford.

Budgeting will also identify where you can cut down on spending to free up funds to pay the monthly car instalment or bond repayments.

Don't wait until you have a car or your own home to experience what it feels like to be without those couple of thousands.

Once you decide it's time for that big-ticket item, start putting the money aside that you will need.

If you're buying a car, don't only save what repayments will cost you.

Include extra costs such as insurance and petrol. Estimate how much you'll need based on how far you travel between work and home daily.

For a house, make the same provisions. If you have already calculated how much you think your monthly instalments will be, put that much aside. Don't forget to include the other costs that come with home ownership, such as municipal rates and structural insurance.

Remember that home ownership also includes many upfront costs, like transfer fees, that you need to be prepared for.

So when you focus on your savings, do not forget to factor these into your savings plan.

And don't forget that when you are buying a big-ticket item for which the bank will lend you the money that the interest rate on the loan will vary and you need to know you can afford higher repayments if interest rates rise.

It's also a good idea to channel any extra money or windfall that comes your way into your savings. You may be tempted to spend it all - after all, you only live once. However, you'll reduce the time between when you begin planning to acquire your house or car and actually getting it.

By the time you're accustomed to paying for these items, you will have also saved up money to put down a deposit. The transition from saving to ownership will be easier because you will have made the necessary adjustments to accommodate the new expenses.

The savings journey can be difficult. If you're struggling to save, you'll probably struggle to pay off a car. Revisit your budget and see where you can cut down. You might need to pay off debt to free up disposable income so you don't have to squeeze yourself between a rock and a hard place.

Discipline can also be difficult when it comes to planning for an item you'll only get to enjoy in the future. It's easy to stray from your savings path when money gets tight and you're tempted to dip into your savings. Ask a trusted friend to help you stay accountable and focused.

 Tsamela is the founder of piggiebanker.com. You can follow her on Twitter @DineoTsamela

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