Saving For A High Quality Kitchen
Purchasing a high quality kitchen can be a long term financial commitment as it will be an investment that you will not have to renew for many years to come. If you are looking at making a purchase like this, there are many considerations you should make about what you wish to buy. Spend time looking at different styles and think about how your situation may change during the lifetime of the kitchen, and make sure you have all eventualities thought through. For example, are you planning on having children, and do you have issues reaching items that are high up?
You should also consider how you feel towards both classic styles and contemporary styles. Make sure that your style of kitchen is not a passing trend, and if it is, that you will be happy with it even if it is not high fashion and possibly slightly dated in five years’ time.
When purchasing a quality kitchen, most people will spend a high amount as higher cost and more money put into quality will act as an investment in the long run. You would not want to go for a much cheaper option that will need updating in half the time a higher quality version will need to be updated.
As a high quality kitchen is seen as an investment, you should look at the savings you already have when raising the money to spend on it. You may have to save for you dream kitchen and there are many ways in which you can do this. It can be a good idea to make a timeline of when you would like to have the kitchen started and how much you can afford to invest in the project each month so that you can work out the best option for you.
As a kitchen is something that you will probably wish to have installed in the near future, you are probably best looking at short term investments once you have decided how much you wish to save and in what timeframe. These will allow you to invest without committing to holding your money in a savings account for a long period of time. These types of accounts usually offer a lower interest rate than longer, fixed term investments and you should shop around for high interest savings; the internet is a great place to do this.
Most ISAs do not have long, fixed terms and a fixed term ISA will usually have an investment commitment of up to five years, although there are shorter fixed term ISAs to invest in. As these are fixed term, you may be taking a risk that variable rates may increase in coming years, whereas a fixed term ISA will remain at a fixed interest rate. In the current economic climate, these fixed term ISAs are seen as attractive accounts. This is because the Bank of England base rate is currently at an all-time low. This reflects in the variable rates as the benchmark for most variable rates is the Bank of England base rate. Having a fixed rate ISA will keep you on track as you can invest the same amount each month and be safe in the knowledge that you know what you will get from account once the fixed term is up.
Savings bonds are another great way to invest your money on the high street, especially in the short term when saving for a kitchen. Like with cash ISAs, you can invest in a fixed term/fixed rate bond or you can choose a savings bond with a variable interest rate. Fixed rate bonds usually offer a higher rate of interest and in the instance of saving for a kitchen, you will have an end date for your investment. Therefore you will know exactly what you are getting out at the end of the fixed term.
You can also look into the value of savings accounts and investments you already hold. This may be a bit more of a risk as you will be spending money that you already have, but it could be a great way to get your dream kitchen sooner than you originally thought. If you have an investment vehicle that you do not intend on using in the near future, you could see it as an option to use the money you already invested in your savings account. You could then set up a direct debit to repay the money you have ‘borrowed’ from your existing account and repay the investment over the period of a few years – which may be a similar period of time you would spend saving for your kitchen.
You could also do the same with any existing savings for children. If you do not plan on giving your child the money stowed away until they are 18, as most parents/grandparents do, you could use this investment to pay for your dream kitchen and then repay the ‘borrowed’ investment over a period of time.
Borrowing from existing cash will mean that you will lose out on the interest that these accounts would otherwise be accumulating if the money remained in there, but if you repay this as quick as you can, your lost interest will be minimal. You just have to weigh up the advantages and disadvantages of borrowing from other investments and savings before you make a decision to do so.
A new high quality kitchen is an investment in itself, but there are many ways that you can save the funds to purchase the kitchen that you have always wanted. Make sure that you look into all available options and ensure that whatever option you choose to take advantage of, that it’s the best financial option for you.