Making a buying decision shouldn’t always be a problem if everyone has the money to throw around. But money is limited and nobody really likes to spend it on worthless items.
This is why money management should be an important skill everyone should have. Your knowledge of this will help you make smart financial choices.
Trust me, with this skill, you’ll get smarter with spending and also become an expert in making sound financial decisions for yourself.
However, part of being smart with your money requires you to question yourself before you make buy anything. This prevents you from getting impulsive and hurting yourself financially.
So, when you are faced with the decision to buy a product, you need to ask yourself some question to measure your financial capability before making a purchase.
Is this a need or want?
Identifying an item as either a need or want before buying it could help determine your decision on the item.
Human wants are unlimited and not having what we want might not really affect us. On the other hand, a need is a necessity you can’t afford to let go if you have the money to buy it.
2. Is this in my budget?
Whether an item is a need or want, you need to be sure if your budget for the month covers this or not. If you have it in the budget, fine, it will only make things easier for you.
However, if it’s not in your budget sacrificing what you really need for it might negatively your monthly expenses. It is therefore important to consider the consequences of spending a certain amount of money on a good or service.
3. Will I have to sacrifice elsewhere?
Okay, this item is not in my budget, but will I be able to cover its expenses elsewhere? Having a thought like this could prevent you from making a hasty decision about the product.
You can think about it for a while and if you realize that you have no extra money anywhere to buy the item, it’s better you wait till you get the money to buy it or better still include it in your next budget.
4. Will I have to finance it?
Now, in case the seller is willing to give you the item on credit, you need to still consider its implication on your personal finance.
You need to be clear about how long it will take you to pay off the debt you are about to take. How much interest it’s going to cost you; and how much debt do you already have to settle.
Again, taking time to think about this will give you the opportunity to take an informed decision that won’t hurt your pocket.
5. Is this the right time to buy it?
Now, this isn’t about whether you have the money to buy the item at the moment. It is about the product and its price.
As you know, the price of some products have seasonal fluctuations. And there are some that get into the market with a very high price but as time goes one, the price reduces.
If you are buying a product like this, you need to be sure if it’ll be cheaper anytime soon.