Millennials and Gen Z are living in a totally different era compared to the other past generations.
The two generations are needed to have more material objects than any other generation that ever existed. From smartphones, laptops to cars, these generations are living a rather expensive life compared to their parents.
All these things don’t come cheap. Some require millions to acquire, something that has frustrated the youth.
So how can young people afford to pay for some of these things given that they rarely have a big salary?
Below are 5 ways young people can make big purchases with ease:
Save For the Purchase in Advance
This is the best way to acquire anything you want. In a generation that lives solely on instant gratification, patience to save for what you want has become a myth.
You want that 14? Start saving for it now. You want your first car? save for it. This is the best way because it’s stress-free and you are not charged any added fees.
Take a Loan
If you have a stable income stream, you can definitely access loans that will you help you make your purchases.
It’s important to remember that many types of loans exist and have different interest rates and terms. Do some research and find the loan that’s best for you. The best place to start with this is SACCO loans.
Most SACCOs offer loans up to 3 times the amount you’ve saved and you only need guarantors to access the loans.
Microfinance Loans (MFL)
Sometimes you might want a loan but you have very little savings in your bank account.
Microfinance institutions offer small loans (micro) to individuals who cannot get conventional loans from the bank.
Planning ahead is normally underestimated but can help you big time in making purchases.
Planning involves creating a budget, researching and planning how you’ll make the payments.
A general rule of thumb, according to the 50 30 20 budgeting rule, is to put 20 percent of your after-tax income towards your savings. Always do your planning with this in mind.
Hire Purchase (Lipa mdogo mdogo)
This is actually one of the worst ways you can buy anything and we greatly discourage it unless it’s very necessary.
Hire purchase, popularly known as Lipa Mdogo Mdogo, can help you afford big-ticket items by making smaller payments over time but usually comes at a price.
Hire purchase has its advantages and disadvantages but the key thing to watch out for are hidden charges that might spike your interest.
Yes, hire purchase buyers can return the goods, rendering the original agreement void as long as they have made the required minimum payments but they normally end up forfeiting the cash they have paid for while owning the product.