You're at the store and you see this thing that you absolutely have to have. It's practically calling your name, whispering sweet-nothings into your ear, and before you know it you're walking out of the store with the new thing tucked safely in a shopping bag. Then it hits you. Buyer's remorse is sitting on your shoulders like a ton of bricks and you start to question your recent purchase. Sure, the thing is great, but was it a good decision? Was it a smart choice?
Before you head to the store or decide to purchase a new thing, take a few minutes to ask yourself these questions. You could save yourself a lot of time, money and regret in the end.
Can I afford it?
This is an obvious question to ask before making any purchase. Do you really have the money to buy this new thing? The best way to answer this question is to take a look at your monthly expenses for necessary items like rent, bills, groceries, gas, car payment and insurance. Can you purchase this new item and still afford all of your existing expenses?
If the answer is no, you should reconsider making the purchase.
If the answer is maybe or you’re not sure, try making a detailed list of your expenses. A budgeting tool like Shoe Box Budgeting can help you get a handle on where your money is going and identify areas where you could cut back and save. After analyzing your budget, you may find that with a few months of saving you can afford the new item without hurting your ability to take care of other expenses.
If the answer is yes, you can afford it and purchasing this new item will not affect other expenses, then that’s great! You must have done some serious budgeting and saving for this new item, but it doesn't stop here. There are a few more things you should ask yourself before swiping your card to ensure you’re making a smart purchase.
Can the item multi-task?
Whenever I plan to make a purchase, I consider the item carefully and try to imagine all the possible uses for it. If I’m thinking about buying a particular shirt, I’ll ask myself if the shirt can be dressed up for work and dressed down for weekends. Do these new shoes only go with one outfit or can I wear them with jeans, skirts and dresses?
If you’re thinking about technology, ask yourself if the new item can be used for both work and play. Are you buying that fancy new tablet just to play arcade games? Will that new laptop computer allow you to write your term paper as well as edit your latest viral video?
My rule when making purchases is the more expensive the item, the more needs it should fulfill and the more problems it should solve. A $12 pineapple corer can’t multi-task (it only cores pineapples) but it is inexpensive and satisfies my need for delicious, juicy and core-less pineapple.
An iPad, on the other hand, is quite expensive but it can be used for sending e-mail, catching up on blogs, playing games, editing photos, reading books, managing my finances and much more. Still, just because it can be used in many different ways, doesn’t mean I should jump right into buying an iPad. There are still more questions to ask before making a purchase.
Do I already have one?
Do you already have a similar item that provides all the functions of the new item? This question is especially relevant when it comes to technology. What benefits does the new piece of equipment provide? Are the upgrades purely aesthetic? Does your existing piece of technology perform all the same functions, but in a slightly less flashy exterior?
Maybe the new technology will allow you to produce higher quality work in less time, but is the expense of a brand new piece of equipment worth it? Is it possible to upgrade your existing technology for a cheaper price than buying a whole new machine? These are all things to consider before diving into a purchase, especially with technology.
What is the true cost of ownership?
So you can afford the initial price of the item, it performs multiple necessary functions and you don’t already have an item that can do all of the same things, but what will the item actually cost to own over its lifetime? If you’re planning to buy a car, what will you spend in gas, insurance, repairs and depreciation during the years you own it? Financing a vehicle can lead to an even higher true cost of ownership due to accrued interest.
If you buy that new computer, what will it cost to get all the software you need? What accessories are necessary to protect your purchase? Do you need to insure it in case of accidental damage? What will it cost to repair it when something goes wrong?
If the true cost of ownership is out of your reach, you many want to reconsider making the purchase.
Asking yourself these questions and more can help you make a smart purchase and avoid causing any issues in your budget. What’s the number one question you ask yourself before making a purchase?