I went shopping today. I still had some gift certificates left from the holidays and decided to take a break from work and enjoy my lunch shopping. As I was walking through the store I found myself asking some interesting questions just naturally. I realized how I have created this healthy system of checks and balance for myself to guide me through spending. So, next time you are out there spending your hard earned money, you can ask yourself these questions to see if it's worth it.
1. Is this in my budget?
Of course you first need to have a budget, but once you do, it makes spending your money guilt free! Not having some sort of budget, even if it is a general one, is like driving without direction. You will never get far, or worse: you'll end up getting lost. If you are working with me, you already know how easy and fun budgeting can be. So keep your budget in mind as you are buying.
2. Can I afford this?
Sometimes even if what you are buying is within your short-term budget, it might not fit within your bigger goals. For example, if you have a goal of buying a house, sometimes you might be better off to skip the purchase. Even if you have the money at the end of the week, it might be better for you to put that money towards your savings. You would be happy when you reach your goals.
3. Do I really need this?
Many times, you might find yourself having a snap desire to buy something, even if you don’t really need it. Yes, you can always have another pair of shoes, but do you really need it or are you just buying for the sake of buying? In a study of 700 women, 79% said they would go on shopping sprees for an emotional boost.
4. Do I need this, right now?
Even if you need it, can the purchase wait? I find myself sometimes buying something that I will eventually need - like that perfect dress that would be great for the cocktail party that I am going to in a month from now. Learning to manage your cashflow is as important as managing your spending all together. You can save yourself months of interest expense and possible late fees if you can manage your cashflow better.
5. Is there a better way to spend my money?
You work hard making money, make sure it is being spent in the best way for you. My dad always told me it is better to have one good shirt that lasts you, than 10 cheap ones that don’t. My motto is: if you only have enough money to buy something with poor quality then save it until you can get the better valued item.
I find my selective shopping habit makes my purchases truly rewarding. When I buy something today, I understand how it affects my finances and how it fits with my overall goals.
