How do you tell if that item you’ve just picked out and added to your shopping cart is worth the money? Many times, you come across something you crave but you're just not sure if buying it is the right thing to do.
In the back of your mind, you actually know that small impulse purchases can add up fast if you don't take a pause to stop and think about whether this is a waste of money or not.
Following the Covid-19 pandemic and its effect on most Kenyan pockets, many are cutting back on spending and trying to be smarter with a budget. This emphasises the need to carry out proper evaluation prior to making any purchases.
Chances are that you’ve already come across the popular question when it comes to this particular topic, "Do I really need this?". And it is a legitimate question.
However, one has to dig a little deeper in order to determine whether he/she is getting value for their money or not.
It has been argued that when people go shopping, they derive their happiness not from the things they buy, but rather from the motivations behind those particular purchases.
Whether we acknowledge it or not, big emotions exist around money and it is, therefore, crucial that one tries to be as objective as possible when taking the simple tests suggested below.
The goal is to avoid buyer's remorse - which is that feeling of regret you have after buying something, especially expensive stuff.
This type of remorse can manifest itself as guilt for overspending on something you don’t really need that you should have not bought at all.
With this in mind, let’s look at some quickfire questions you should ask yourself prior to making any unplanned purchase.
Read Also: How To Behave Rationally With Money
Can I afford it? - As a rule of thumb, if you can't pay in cash, reconsider the purchase, particularly if it's an unnecessary item.
It is important to note that the word “afford” can mean different things to different people.
Being able to afford something could mean; that one can manage their monthly payments without strain, it (the purchase) doesn’t max out their credit card, or it (the purchase) won’t force them to move back to their parent’s home.
Interestingly, in Spanish “I can afford it” becomes “me lo puedo permitir” (I can permit myself).
This is very accurate because, at the end of the day, it just boils down to whether or not we give ourselves permission - whether or not we feel justified buying that particular item.
Can I get it for less somewhere else? - Now, if you really need to get the item in question, then price comparison is your friend.
Google is your friend. Search the Internet to see if you can buy the item for less somewhere else. There is almost always an opportunity to make some significant savings somewhere.
You could also check out if whatever you want to buy is available on lease or rent, just in case it’s something that you won’t be using every day.
Am I buying this because I’m trying to mask an emotion? - The rule has always been this; never make any decision (financial, personal, or any other kind) when emotionally unstable. Pause gather yourself and then come back to it.
If you're feeling sad, or have just fallen victim to ‘character development’, it might be a good idea to disable your mobile banking app and lock away your debit/credit card.
Even scientists have gone on to back this formula.
Dr. Jennifer Lerner (Professor of Public Policy and Management at the Harvard Kennedy School of Government), discovered a phenomenon called myopic misery.
This is a condition in which people only think about satisfying their current emotions rather than their long-term goals when it comes to their finances.
Read Also: The 7 Money Personality Types
Am I going to use this regularly? - If you’re buying something that you’re only going to use once in a blue moon, it might not be the best idea to actually buy it. In such instances, consider borrowing the item.
Try to think about how often you'll use that particular item in your daily life when you get a sudden urge to splurge.
For example, spending a fortune on camping gear yet you only go camping once in two years would not make sense. Renting such items would be a sound financial move.
Do I need it or do I just want it? - The distinction between what is a need and what is a want can mean the difference between a blown budget and healthy finances.
When you say you "need" something, you should really mean that you can't function without it.
It’s funny how we often convince ourselves that something we want is actually something we need.
This is a cultural trait where we; feel the need to be approved by our friends, to have the coolest car, to wear the most trendy clothes, or even have the most elaborate wedding. This desire to fit in or be accepted can lead to bad financial decisions.
Limiting your spending to only the necessities is one of the quickest ways to get out of debt and get to enjoy the dream that is financial freedom.
If you don’t absolutely need it, then you should consider not buying it. It’s that simple.
What am I gaining by purchasing this? - What will actually be gained from the purchase? Are you looking for approval or status from others? Do you want it because your best friend has it? Or is it something that will genuinely improve your quality of life?
When you stop thinking about the "why" of your purchase, your final decisions will always be on point.
Can it wait? - It is always advisable to give yourself a couple of weeks to a month before buying a non-essential item.
If you can delay an expense, you’d be surprised how often you no longer want the item after a little time has passed.
If you don’t need it at that very moment (and honestly few things short of diapers and toilet paper match this description), consider adding it to a “purchase later list.” Wait a while before buying it and see if you even still want it.
You could also create a 45-day buy list and have it as notes on your phone. Write down what you want and the date the urge was really up there. Then run through the list periodically after 45 days (or 30) to see if you still want it.
How Many Hours of My Life Does this Equal? - This concept comes from the book - Your Money or Your Life by Joseph R. Dominguez and Vicki Robin. It advises one to think of purchases in terms of hours of your life.
The authors argued that since we work for money, then it could be said that we purchase everything with hours of our lives.
For example, the next time you justify buying to yourself by saying “It’s only 10K,” you might want to consider saying “Is this worth working (the number of hours it takes you to make 10K) for?” instead.
Now, don’t go shopping with a list of all these questions and a pencil every time you feel the urge to splurge. Simply having one or two vital ones such as ‘why’ and ‘do I need it’ may be all that you need to prevent impulse shopping.
There are those who may go shopping for a pricey item in order to be perceived differently by their friends and peers, whereas others may go shopping in order to feel better about a particular situation.
Whatever the case may be, you want to make sure that every purchase you make is for the greater good, not just because you're bored or have cash on hand that is just itching to be spent.
Try weighing the pros and cons of why you want to buy an item and see how it can honestly benefit you in the future.
Money is a valuable asset that should be spent in a way that aligns with your value and priorities.