You’re convinced: You really want that expensive handbag. Or maybe you just know that gigantic entertainment center will transform your weekends. So you swipe your card and the dream item becomes yours. You’re thrilled!
That is, until a few weeks later when the credit card bill comes, and buyer’s remorse hits. You can’t help wondering: Was it really worth the price?
Don’t get sucked in again! Before you say “yes” to a large purchase, ask yourself these 7 questions:
1. Do I have cash to pay for this item?
This question will help you determine if you can really afford the purchase. You need to have liquid funds that can cover the cost of your item. Putting it on credit means you’ll be hiking up the price once interest is tacked on, and you’ll be reminded of a possibly regrettable purchase for a long time to come.
2. Is this the best price?
When making a large purchase, it’s important to comparison-shop by checking several online listings and some brick-and-mortar shops as well. Visiting coupon site can help with automatic savings. Also find out the best season for buying this particular item and wait for a sale if it makes sense to do so. Finally, consider purchasing a previously owned item for less.
3. How many hours of work will you need to do in order to pay for this purchase?
Use a new perspective to calculate the real price of your purchase by determining the total number of hours you’ll need to work to pay for this “must-have” item. Is it really worth the price?
4. How else can I spend this money?
Another way to think about the money you’re about to spend on this single item is to consider what else can that money buy? A few weeks’ worth of groceries? A year’s worth of monthly dinners out? Take some time to think of other ways you can spend this money before making a final decision.
5. Have you splurged recently?
If you can afford it, there’s nothing wrong with an occasional pricey indulgence. But, when luxury purchases become a habit, it can spell disaster for your finances. If you picked up a designer handbag just last week, you may be best off waiting a bit before buying the one that’s caught your eye today.
6. How often will I use this item?
Yes, it seems essential today, but looking ahead, how often do you think you’ll really use this item? If you can see yourself only using this purchase a few times a year, you may want to re-think your decision. You can even break down the cost of the item by the number of times you would use it. How much would each use cost you?
7. How much will this money be worth if I put it into savings?
You have the funds for this purchase, but how much would that money earn if you saved it? Check out this investment calculator to get that magic number. The results might leave you pleasantly surprised and more motivated to plan your investments.
Here at Wasatch Peaks, we have budgeting accounts to help you plan for larger purchases, along with several long-term savings accounts that can help your money grow. Take the time to consider your purchase and avoid buyer’s remorse!