Over the years my family and I have developed 6 questions we ask ourselves before we make a purchase. This forces us to be mindful spenders, and it prevents us from wasteful spending. Before you make your next purchase, ask yourself these 6 questions, and see if they help you keep your money in your wallet.
1.) Is this a want or a need?
It’s okay to splurge on a want every once in a while, but if you are trying to increase your savings rate, or pay off debt, wants should be postponed. Make sure you don’t justify your purchase by convincing yourself it’s a need. Yes, shoes are a need, but shoes to match your new outfit are not. You will find that most purchases are really a want disguised as a need.
2.) Is this an impulse purchase?
Unless you went to the store specifically to buy an item, it’s an impulse purchase. Stroll on past the clearance. Establish a no impulse purchase rule in your house, and see how much more you will save. This is especially useful for kids. Have them identify impulse purchases, and remind them to keep their allowance in the bank. Advertisements love to market to children, so teach them early.
3.) Can it wait?
Do you have to make the purchase now? If not, wait. You may find that you already have something that will work, or you can wait until it goes on clearance. Never pay full price!
4.) Can it be rented or borrowed?
Remember that one time you went on a camping trip, and splurged on that $250.00 tent? You swore you would use it every weekend, yet it still sits in the attic. Unless it’s an item that you will use often, try to rent or borrow it. This is especially useful for tools or equipment that you don’t use on a regular basis.
5.) Can it be found cheaper?
Do you have to buy it new? Look on craigslist, garage sales, or for sale groups online, and see if you can find it used for a fraction of the cost. If you need to buy it new, be sure to take the time to do price comparisons, and make sure that you are getting the best deal.
6.) Will this purchase prevent me from reaching my goals?
Whether your goal is to hit a specific savings rate, or to pay off your debt, don’t let a purchase prevent you from meeting it. Our main goal is to retire early. My husband’s favorite phrase is “That affects my retirement.” He’s absolutely right. Going out to lunch with co-workers, buying a new car, and purchasing fancy coffee all affect his retirement. Remember, those small purchases can quickly add up to big costs.
Once you learn to ask yourself these questions before making a purchase, it will soon become habit. You will start to answer the questions without even thinking about it. Instead of trying to talk yourself into buying something, try to talk yourself out of buying it. Do you have any tips or tricks to help you save more and spend less? Feel free to share them.