If you break down personal finance issues such as not having enough savings or having a lot of debt, you can probably find in a lot of cases the root cause to be related to spending. Spending, whether buying on impulse, because you think you deserve to spend, or just because it’s foolish, tends to knock people off course each month. Several months into the year, it’s hard to find the path back to achieving important goals.
Having a plan or monthly budget is a commonly mentioned tool to help you curtail spending where needed and to make sure you’re living within your means. While I love budgets because I truly believe they are necessary to keep money from controlling us, I think there are things that can be done outside of budgeting to help with smart spending.
Sometimes a budget doesn’t stop the emotions from running high. Shopping for clothes might be a good example to think about. Before you know it you’ve brought home that new shirt from the store. You reasoned you needed it while you were at the store, but felt foolish about the purchase when you got home. Either the shirt hung in your closet never to be worn, or you took it back to the store feeling a sense of personal conviction for making the purchase.
This year, I want to help you make smart spending decisions! Smart spending leads to paying off debt and saving more! So, before you get too excited about making that purchase, whatever it is, run through these six smart spending questions in your mind before adding the item to your shopping cart.
6 Smart Spending Questions To Ask Yourself
- Do I need it? Do you have an item at home that needs to be replaced because it is broken or no longer works? This is a problem in the area of electronics. Electronics can be expensive, especially when it’s the latest and greatest gadget. Don’t purchase a new TV or computer if you don’t actually need one.
- Have I looked for used options? Often forgotten, but a great option is to purchase used items. Do you really need the new patio table and chairs this spring? I once found a large patio table and chairs at a garage sale for $25. The new price of the same set would have cost me well in advance of $100 to buy new. With a little bit of cleaning and spray paint we had a new set on the back porch.
- Am I planning to use savings for this purchase? If you reason you need to dip into your emergency savings account for a purchase make sure it’s an emergency. Too often the emergency account becomes and over flow account at the end of the month. You can avoid this problem by creating a barrier to saving such as keeping your savings separate from your checking account.
- Will this purchase result in an overrun budget category? Oh, I’ll just cover that next month, or the next month. It’s okay to run it over now and then, you might reason. But the problem with this thinking is that there will always be something next month. Remember, you created a budget for a reason, so stick to it!
- Does the decision conform to God’s word? I think this is the most important question you can ask yourself! There is immoral spending that takes place in our society, so make sure you don’t get caught up in these acts. But if it’s not immoral spending, how could I be going against God’s word with a purchase from Target? Remember to follow Biblical financial principles. God provides sound guidance on peace and contentment, debt, savings and more. Ultimately, learn to find contentment in what has been entrusted to your care.
- Do I feel a personal conviction about the decision? Ah, a great test is to check your gut! How do you really feel about this decision? Does it make you anxious? You know deep down inside whether it’s a smart spending decision. There isn’t a need to ask your friend, loved one or neighbor. What’s inside? If it’s anything other than complete confidence that this is the right purchase, hit the brake pedal.
What do you think about these six questions to help insure smart spending?
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Always take some time to step away because in the end you really don’t need it, you just want it. If you separate yourself it will help you make the decision.
Craig´s last post ..Weekly Personal Finance Twitter Chat: Identity Theft
Great questions – I think one other “spending filter” is to ask some of these same questions to a close friend or loved one who will give you honest feedback.
Obviously you don’t want to do that with every pack of gum you buy, but with the bigger items this can be a useful way to help cut through our own justification.
Jason @ Redeeming Riches´s last post ..What is The Real Cost to Skipping Your Credit Card Payments?
These are all great questions to ask yourself when considering a purchase. My wife and I go through this process all the time. We are seeking to be good stewards and good testimonies with our finances. Thanks for this article.
I also agree with Craig that one should always “sleep on” a decision. And with Jason that running the choice by a wise friend that you trust is always a good way to help avoid unnecessary purchases.
Khaleef @ KNS Financial´s last post ..Twitter Updates for 2010-01-13
I like to remind my readers/students to go “buying” not shopping. They have already thought through the purchase, decided what price they are looking for, and just need to execute. This is true, whether buying groceries, clothes, or household goods.
Great review!
Dr Dean´s last post ..BSN vs ADN-Battle Royale of the Century!
Great advice Craig and Jason. Thanks for commenting. Seperating yourself from the emotion of of the purchase and getting the opinion of a trusted friend (especially for larger purchases) are good ideas.
Khaleef, I’m encouraged to hear of your motivation to be a good financial steward, but also to be a good testimony to others. I don’t hear the testimony comment often.
Jason @ One Money Design´s last post ..New Look for One Money Design
This is a great questionnaire to have around. Most ‘financial accident’ happen because of not looking over these red light questions.
Keep it on
Joe´s last post ..Automatic Bill Payment! Beware
You touched on it a little but I would also add researching till you know you’re getting the best possible price–even buying new.
The littlest bit of research can sometimes save you lots!
Have I looked for “used” is the best one in my opinion. Why run out and buy new? There are good used products. You just have to take time to look.
Ken´s last post ..Money Secrets? Spill the Beans
The rule I use mostly is – Do I need it? And the way I gauge that is with the 24hr rule. I need to sleep on the purchase and make sure it is well within my budget prior to making the final decision. These are all excellent points!
I am definitely the one in our marriage that gets the urge to make impulse purchases (probably because I sit in front of the computer all day at work!). Whenever this happens, I force myself to put the item on my to-do list and make a note to think about it at least a day later. This process definitely keeps me honest! It also helps that my wife and I feel accountable to each other to discuss most purchases before making them.
Andrew @ Earn Give Save´s last post ..We’re cutting our cable, part II
Stopping the habit of spending irrationally is a great way to control your money. Alot of times we are spending to spend. The world and society around us literally is pounding into our heads, more, more, more. “Supersizing” has become a right of passage when eating out or buying anything on the internet because you are bombarded with “so much more” for just $1 extra.
Where it starts should be us defining what “fulfills us”. I did a recent blog post called “WHAT IS ENOUGH?” that helps people define what “enough of stuff” do they really need in life: http://www.thebryanmcdonald.info/what-is-enough/
Once we can define this, I believe controlling our money and our lives becomes much easier and life becomes attaining your higher purpose and not more and more “stuff”
great tips. I usually classify things as a need, want, or desire. If you stop and think about it, much of what we buy is a want and not usually a need.