Impulse shopping is the enemy of financial security, but there are ways to slay our impulse shopping demons. You can start by asking yourself a few basic questions before making any significant purchase.
Do I need it or just want it?
When I was a little kid I’d always tell my mother why I needed this or needed that. “No,” she would remind me, “you don’t need new sneakers, you want new sneakers.”
As adults, we do the same thing. We convince ourselves that our “wants” are really our “needs”. We need that new outfit to project a professional image at work. We need that vacation as a reward for all the hard work we’ve put in.
Of course, it’s quite alright to indulge in our “wants” once in a while. No one should live like a miser. But it makes sense to make sure your “needs” and financial security are taken care of first.
How many hours on the job will I have to work to pay for this?
We work hard for our money. Unfortunately, the “call of the mall” and the rush of purchasing something new makes us forget this fact. The next time you find yourself salivating over a potential purchase think about how many hours on the job you’ll have to work to pay for it.
Take a peek at your last income tax return. Divide your after tax income by the estimated number of hours you work a year. This should tell you roughly how much you earn per hour. Use this figure to determine how many hours of work anything you purchase requires.
When you determine, for instance, that the new LCD TV will cost you 120 hours of work on the job or that the new designer handbag will cost you 45 hours of work, you might stop to reconsider.
Can I rent or borrow this?
Why buy when you can rent for a fraction of the cost? Besides, it’s one fewer thing that will end up under your bed, or buried in the back of your closet. Nowadays you can rent anything, from power tools and DVDs to video games and wedding dresses. And if there’s something you can’t rent, chances are you can borrow it from a friend or family member.
Can I get this cheaper somewhere else?
Before you hand over your hard-earned money, make sure you’re getting the best deal. Comparing prices on the internet is now easier than ever. Smart phone apps like Google Shopper, RedLaser, and Amazon’s Price Check let you compare prices at online retailers and at bricks and mortar establishments.
Don’t have a smart phone? Ask the salesperson when your potential purchase is expected to go on sale. They just may end up giving you the sale price early. In some cases, you’ll find that the item was recently on sale. Ask if they’ll still honor the sales price. You’ll be surprised at how often they’ll say yes.
Will this purchase bring me closer to my financial goals?
Having clear cut money goals is the key to financial success. A purchase either moves us closer or takes us farther away from our financial goals.
When you know, for instance, that you’re working to save a down payment for a new home, the fashionable pair of shoes or newest edition iPad starts to look less enticing. Once you’re crystal clear about your goals you can put all of your potential purchases into proper perspective.
BMWK, what are some of the questions you ask yourself before making a significant purchase?
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