Although many people can earn more than enough money to cover their basic needs, this disposable income can quickly evaporate if it isn’t spent wisely. Instead of simply going with convention or succumbing to peer pressure in making an expensive purchase, take a step back and use these methods to start a proper evaluation of whether or not the expense is worthwhile.
Defining purpose
A lot of us can make the mistake of rushing through this step or skipping it altogether. But if you wish to make sure that you’re getting real value out of a big purchase, it’s essential to dig deeper than the gut feeling of “I want this” and understand the actual motivations behind every major expense.
Living in the central business district, for instance, can be more expensive than surrounding areas. Still, if you’re certain that you’ll be working there long-term, you can scout for a condominium for sale in Makati, knowing that over time, the benefits of accessibility will be well worth the cost.
On the other hand, if you’re just buying something for prestige or status, such as a high-end watch or designer bag, it can be much more difficult to justify the price tag. Define your purpose, and almost immediately, you can begin to dismiss certain purchases as a pure luxury while others become easier to evaluate objectively.
Evaluating features
It’s a standard practice among businesses to highlight the many features and advantages of their products and services. After all, these are the main reasons a consumer would want to buy them over similar offerings. But armed with a better knowledge of your personal motivations for making a purchase, you can evaluate those features to find out if they truly serve your purpose. This is especially useful for first-time consumers and in the realm of gadgets where terminology can seem confusing or arcane to all but the hardcore enthusiast.
If you’re shopping for a camera, for instance, this simple purchase can become complicated by numerous considerations. Are you just starting in photography, or have you been a hobbyist for some time and now seek to improve your skill further? Will you take pictures on your travels or mostly just around friends and family? Do the research, and you can weigh the importance of various features accordingly to arrive at the best price point for value.
Considering the big picture
Smart business owners know that there’s an extra dimension to evaluating any given expense; it’s not all about weighing costs versus benefits but also taking the so-called opportunity cost into account. In the same way, you can’t fully evaluate personal expenditure without considering the big picture. The money you are spending on something could be spent elsewhere, even if it’s disposable income.
Do you want to buy a treadmill and get some exercise at home, or buy a bike and benefit from a similar increase in physical activity while also enjoying an easy, environment-friendly method of getting around your city? As a rule of thumb, you’ll always do yourself a favor by considering alternative options and understanding what opportunities you might be missing out on whenever you commit resources to a big purchase.
You don’t have to be a spendthrift all the time, but by following these tips, significant expenses can be avoided if they aren’t worth it.
