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Important questions to ask yourself before making expensive purchases

5th February 2020 Print

We’ve all had that dreadful feeling of regret after making a large purchase and realizing that it was a costly mistake. For lots of people, the realization of their spending mistake doesn’t hit them until weeks or months later but once they do realize it, they see what a huge waste of money it was and they’re not even sure why they bought it in the first place!

Sure, you’re going to be frustrated with the item but you’re mostly going to be frustrated with yourself for making such an impractical and financially irresponsible purchase. Why are you so upset? Because the money spent represents an opportunity that you blew… an opportunity that you threw in the trash.

In your mind, you spent your money on something that’s isn’t benefiting you in any way and the fact that you could’ve spent that money on something else you actually need is what’s fueling your disappointment. This opportunity you threw in the trash is something that Psychology Today calls Opportunity Cost Neglect, and it’s all part of why people spend too much.

Opportunity cost neglect is something that everyone has experienced at some point in our life so it’s not something to beat yourself up too terribly about but it’s definitely something you can learn from and think about before your next big or expensive purchase. 

Remember, no one’s perfect and we all make mistakes… some are more costly than others but nonetheless, we all make mistakes. The important thing is to move forward not making that same mistake. To prevent you from making that same costly mistake, here are a few questions you can ask yourself before making your next big or expensive purchase… it might save you from making the same costly mistake twice! 

Important Questions to Ask Yourself Before Expensive Purchases

Question 1: Question 2: Is this purchase a want or need?

Before making any major purchases, you need to first establish if this purchase is a want or need. People like to justify their decisions by saying “this is a want I really need” or “a need I really want” but you have to make some kind of decision because that’s what’s going to determine why you feel you want or need to make that purchase.

Question 2: Why do I need or want to make this purchase?

This is a question you have to be honest with yourself in answering. If your answer to this questions sounds ridiculous to you, and you’re the one wanting to make the purchase, then you know you should spend your money on it. 

Question 3: Can I really afford to make this purchase?

One way to determine if your purchase is going to be a good investment is to determine if it’s going to be a cheap thrill or if it’s something that’s going to benefit you long-term. That’s not saying that you can’t make fun purchases because you want to but what it is saying is that if your budget is already limited, you need to make smarter financial decisions. 

If that purchase is going to require you max out the credit card you just paid down, leave your bank account empty, or have you living paycheck to paycheck for a couple of months, then you really can’t afford it… you can afford it in real-time but in retrospect, it’s going to have you struggling financially until you can make that money back… is that purchase really worth that? 

Question 4: How long did it take me to make the money for this purchase?

As a hardworking adult, you deserve to buy things you not only need but also things you want. But in making purchases you want, you sometimes have to get out of the mind frame of “I work hard and deserve this” and enter the realm of reality and consider how much the purchase will cost you and how long it took you to earn the amount of money this purchase will cost you.

If this purchase is $1,500.00 but it took you a year and a half to save up for it, is it really worth it? You also have to look at, if you make this purchase, will it completely wipe out your savings account. People fail to understand the importance of saving and how difficult it is to do. 

You can follow all the top tips to save money on the purchase you want but are you really willing to spend the money you spent a year and a half saving for in three seconds? That’s definitely something to think about. 

Question 5: Do I really have to buy this “new?”

We tend to forget that there are always alternative, more affordable options for just about anything! People feel like “new” is best when, in most cases, it’s really not cars and phones are a perfect example.

Cars and now, cell phones are thousands of dollars. People feel like in order to look like they have the best, they buy these things brand new, and that’s not the case at all. There are used cars you can get from big-name dealerships that have all the features of newer model cars, they’re just at a discounted price because the previous owner may have traded it in for something newer or it could have been a rental service vehicle with very little miles on it… The bottom line is that the car doesn’t have many miles on it and you can still get a nice car for a lower rate.

The same logic applies to cell phones. You don’t have to spend thousands of dollars on a new cell phone… you can simply find premium used phones at low rates. Again, premium used phones have the same functions and features of the new one, they’re just more affordable.

Final Question : What are you going to do?

This is the last and final question. Upon reviewing the important questions to ask yourself before making an expensive purchase, you should be able to have a clear-cut answer to this question. And if you’re still unsure, give yourself some time to think it over a review the answers to your questions again. But just be sure to be realistic about your decision...the goal is to not make the same mistake.