Consider What You Gain Before Spending Your Hard Earned Money

Part of good financial management is making decisions based on your priorities, and understanding how a purchase or a spending decision will benefit your life.

Before you spend money on a product, service, or experience, it’s a good idea to consider what you will gain by making the spending decision. Spending money can be a positive experience when done with a focus on what you can gain as a result of your spending decision. Here are a few things to consider:

Is It Something Your Family Values?

First of all, you need to decide if it is something your family values. Do you enjoy making memories on vacation? Do you spend time playing video games together? What do you enjoy doing together? If the purchase will help you spend more time doing what you like to do together, it is probably worth the expenditure. Make sure that the purchase is in line with your personal and family values for the best results.

Will You Gain More Time?

Another consideration is whether or not it will truly free up time for you to spend doing things you actually enjoy. In some cases, hiring someone to clean, or take care of your yard, or even prepare a few frozen meals for you can be worth the money spent. If you are able to spend more time with your family, or if you will have more time for the things you really enjoy, it can be worth it to pay someone else to take care of the task.

Can It Improve Your Health?

Sometimes, spending money now can help improve your health in the long run. Spending a little more on fresh produce can help your long-term health for example. You can also see a difference over time by investing in a good pair of running shoes, or other equipment that can help you exercise more. Just don’t let this be an excuse for you to buy something you really won’t be using. Many people, for instance, talk themselves into buying an exercise machine, only to have it collect dust after a few weeks. Spending more to stay healthy can be valuable — as long as it truly increases your health.

Will It Improve Your Quality of Life?

Decide whether or not your purchase will make you happy, and improve your quality of life. If you spend a lot of time grilling outdoors, it might be worth it to buy a better grill, and build a new patio. Some people enjoy the comforts of a nice home, while others want to travel the world. Think about what’s important to you, and what you think will truly make your life better.

Better Living

The key is to think about whether or not an expenditure will actually help you with better living. Can you see how spending the money will truly improve your life? Will you be able to spend more time with family, or advance your goals and priorities? Be honest in your assessment. If you really won’t be gaining much by spending the money (and especially if you really end up losing), you should consider holding off.

Will Using the Money Take Away from Something Important?

Don’t forget that the money needs to come from somewhere either. Each dollar you use is going to impact other areas of your financial life. If you are spending the money on one thing, there is a good chance you won’t be able to spend it on something else. Consider your financial priorities, and ask yourself whether or not you are giving up something of long-term importance so that you can have something superficial right now.

Do you have to reduce your planned retirement account contribution in order to buy that new game system? Are you skipping your extra debt payment this month so that you can go out to an expensive dinner? The real test is if you have the cash after you’ve already paid for all of your obligations and more important expenses. If you have to give up something that is truly important in order to “afford” something that is less important, you can’t really afford it.

Last But Not Least

You’ve done all the mental calculations, and decided that you want to buy something “fun.” There’s nothing wrong with this. But, before you pull the trigger, be honest about where the money is coming from. A few years ago, I was convinced that I was living within my means because we weren’t adding very much new debt, and I paid more than the minimum on my credit card balances.

I saw a pattern when I became honest with myself, though. I occasionally moved money from another account to “shore up” the primary checking account. Sometimes, I bought two or three things with the credit card. Even though the overall trend was toward paying off debt, the efforts were hampered because sometimes I “cheated” a little bit to make sure I had the money to meet expenses.

Look at where the money is coming from. If you truly have the funds, I have nothing against spending money on the things that you like. However, you aren’t living within your means if you repeatedly have to move $100 or $250 from your emergency fund to cover costs, or if you don’t pay off your credit card balance “just this month” in order to avoid depleting the checking account. You don’t actually have the money for the purchase. You are just shifting things around, and using a little bit of debt to mask the problems.

Consider where the money will come from, and be honest with yourself. Consider saving up for what you want, and then buying it when you truly have the money.

Before you spend money, think about the impact it will have on your life. Consider whether or not you can use the money for something else — something that will actually benefit you more.


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