I noticed something about the way I pay for big purchases which may not be very obvious to people often: if I have budgeted for a big purchase, I will actually pay for it with a smile. In other words, I am not feeling a big pinch from having to pay so much money for something.
Reversely, when I haven’t budgeted for something or I am suddenly faced with an emergency purchase or payment, I do feel the hit to my pocket.
Yes, budgeting does make a huge difference when it comes to the psychology of buying or paying for something. It makes you pay with confidence and no regret or any financial pain.
The point is, if you budget for big purchases in advance, or if you have saved money for an emergency, you won’t feel a big hit from an unexpected emergency.
Certainly, for you to save for a big future purchase, you have to know about it in advance. The more time you have for it, the more you will be able to save. In other words, and unless your car is done or completely damaged in an accident, you can’t just wake up one day and decide you are going to buy a new car. Unless you are very rich or have already saved lots of money. Rather, you would would have a saving and budgeting timeline that starts at least 6 months to a 1 year in advance.
As for unexpected emergencies, such as fixing a leaky roof or replacing the furnace, you are expected to always have some money saved for an emergency. So it is not a matter of whether you will have an emergency or not, you should have money allocated for it regardless.
This of course is different from wasting money on something you don’t need just because you have the money. That is a totally different thing and nothing more than wasteful spending.
So, always budget for future expenses and emergencies even if you can’t predict them or see them in the horizon.