How do I calculate if I can afford a major purchase?

To calculate affordability, consider the total cost, monthly payments, impact on your savings rate, and how it affects your long-term financial goals. Use Delphina's affordability calculator to see how major purchases affect your cash flow and retirement timeline.

What percentage of my income should go toward major purchases?

Financial experts recommend keeping major purchase payments under 15% of your monthly take-home pay. This ensures you can still save for retirement and emergencies while affording the purchase. Always consider the total cost of ownership, not just the monthly payment.

Should I pay cash or finance a major purchase?

Paying cash is ideal if you have the funds without compromising your emergency fund or retirement savings. Financing can make sense if you can get a low interest rate and invest the cash elsewhere for higher returns. Consider your opportunity cost and cash flow needs.

How does a major purchase affect my retirement planning?

Major purchases can delay retirement by reducing your savings capacity. For example, a £25,000 car purchase could delay retirement by 1-2 years depending on your savings rate. Use scenario planning to understand the long-term impact before committing.

What hidden costs should I consider with major purchases?

Beyond the purchase price, consider insurance, maintenance, taxes, depreciation, and operating costs. For cars, factor in fuel, insurance, and servicing. For homes, include property taxes, insurance, and maintenance. These can add 20-40% to the total cost.

How can I improve my affordability for major purchases?

Improve affordability by increasing your income, reducing existing debt, building a larger down payment, improving your credit score, and shopping around for better rates. Even small improvements can significantly reduce your monthly payments.

Can I Afford It? Master Your Big Financial Decisions

Use our powerful financial planning tools to answer "Can I afford that?" with confidence and build the life you truly deserve

From Guesswork to Certainty

Instead of wondering whether you can afford that new car, home extension, or early retirement, use our financial planning tools to get a definitive answer based on your actual financial situation.

By combining cash flow forecasting with scenario planning, you can see exactly how any major purchase or life decision will impact your financial future.

Try Cash Flow Forecasting Try Scenario Planning

Common Questions We Answer:

Can I afford a new car without delaying retirement?
How will a home extension affect my mortgage payments?
Can I retire 5 years earlier than planned?
What if I want to help my children with university costs?

How to Calculate Affordability

1. Define Your Goal

Be specific about what you want to afford, including costs and timeline.

2. Use Cash Flow Forecasting

Model your income and expenses to see your available cash flow each month.

3. Run Scenario Planning

Test different scenarios to see how the purchase affects your long-term goals.

4. Make an Informed Decision

Review the impact and decide if the purchase aligns with your financial goals.

Real-World Examples

New Car

Total Cost:£25,000

Timeframe:3 years

Monthly Impact:£694

See how a car purchase affects your retirement timeline and monthly cash flow

Model this scenario

Home Extension

Total Cost:£50,000

Timeframe:5 years

Monthly Impact:£833

Understand the impact of home improvements on your long-term financial goals

Model this scenario

Early Retirement

Total Cost:£500,000

Timeframe:10 years

Monthly Impact:£4,167

Calculate what you need to save to retire 5 years earlier than planned

Model this scenario

Tools That Make It Possible

Cash Flow Forecasting

See exactly how much money you'll have available each month, accounting for:

Regular income and expenses
One-off large purchases
Seasonal variations
Inflation impacts

Scenario Planning

Test different scenarios to understand the long-term impact:

Retirement timeline changes
Major purchase impacts
Investment strategy changes
Life event planning

Ready to Answer 'Can I Truly Afford It?'

Stop guessing and start planning. Use our financial tools to get definitive answers about your major life decisions.

Start Cash Flow Forecasting Try Scenario Planning

Can I Afford It? Master Your Big Financial Decisions

From Guesswork to Certainty

Common Questions We Answer:

How to Calculate Affordability

1. Define Your Goal

2. Use Cash Flow Forecasting

3. Run Scenario Planning

4. Make an Informed Decision

Real-World Examples

New Car

Home Extension

Early Retirement

Tools That Make It Possible

Cash Flow Forecasting

Scenario Planning

Ready to Answer 'Can I Truly Afford It?'

Frequently Asked Questions

How do I calculate if I can afford a major purchase?

What percentage of my income should go toward major purchases?

Should I pay cash or finance a major purchase?

How does a major purchase affect my retirement planning?

What hidden costs should I consider with major purchases?

How can I improve my affordability for major purchases?