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Five Questions I Ask Myself Before Making a Purchase

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When I was learning to drive, my mom decided she would teach me herself to make sure that I was well educated and wouldn't get in an accident when I was of age to get my license. She told me to be the key in the ignition and turn the car on. Check. She then told me to put the car in drive. She neglected to mention that the car would move even if I wasn't putting my foot on the gas. In fact, I had to put my foot on the break - a critical step she forgot. As we almost went through the garage door, she decided she wasn't cut out to teach me. Just because she's really good at driving it doesn't mean she can explain the process to someone else.

I was thinking about this the other day. I often forget that there are lot of people not like me. Well, I know I'm a weird freak, but in this case I'm focusing on my financial mindset. Part of this financial mindset is these five questions that I ask myself before making a purchase. I've gotten to the point where I'm like my mom driving, I don't think about each of the steps any more. It's all just muscle memory. In fact, it's more difficult to explicitly think about the steps than it is for me to just do them. Nonetheless, I decided to take some time and outline my buying process:

  • How Much Does it Cost? - This sounds easy, but you'd be surprised how many people would buy something without asking the price. I've seen people fall in love with a product and bring it up to the counter already deciding that they want to own it. If you get to that point, you are very likely to over-pay for it.
  • How Much Do I Need the Product? - There are some products that are clear cut needs. I need to eat food. I need transportation to my job to protect my income. There is a gray area when it comes to things that improve my quality of life. Do I need a faster laptop? For something like that, I try to ballpark my productivity gains. Am I going to be able to do more work in the same amount of time and thus have the laptop pay for itself? Am I going to spend less time patching my old laptop? These are usually difficult questions to answer with no right or wrong. I generally lean towards keeping the old laptop. That's probably just my frugal nature.
  • How Much Do I Want the Product? - This is a much easier question to answer. I want things like the new set of Buffy the Vampire Slayer Comic Books, a Blu-Ray player, etc. These are clearly not needs. If it's something small (like the comic book compilation), I will roll it in my head for a while and either get it or put it on a wish list for a birthday or the holidays. I try to limit these small splurges to one or two a month. The Blu-Ray player, at around $200 is the kind of thing that I would allow myself to splurge on once every four months or so. I don't have a rigid budgeting system - I'm much too Lazy for that - it's just one of the 700 balls that I'm juggling in my head at any moment. This might not be ideal, but I find that it works for me.
  • Have I Researched the Product? - Am I buying a good quality product that will last or am I just throwing my money at a short term solution? I already wrote a bit about how I research a purchase, so I won't repeat myself here.
  • How Can I Save Money on the Product? - That's always a big question. If I can save a few dollars, obviously it opens up more room in the "want" category - or it can be used for investing my long term goal of financial freedom. This is why I write about saving money on: cars, golf, restaurants, environmental purchases, vacations (Aruba or anywhere), clothing, movies, music, television, and books, razors, hobbies, gas, housing, groceries, even beer, wine, and almost anything on the Internet.

Do you have a different buying process? Let me know in the comments.

Posted on October 27, 2008.

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10 Responses to “Five Questions I Ask Myself Before Making a Purchase”

  1. Lazy Man says:

    That’s a great chart, but I hadn’t seen it. If I had seen that I probably would have included the step of checking to see if I had money to buy the item.

    There’s also the in between area between the “need” and “want” of “this would be enhance my life.” It’s clearly not a need, but it’s clearly of more utility than the “want.”

    And then I’d argue that he kind of missed the step of trying to save money on the item. He does have “research prices”, but I think that’s in researching the item itself. For instance you may find that a new Mustang costs between $25,000-27,000 (I don’t know what they cost), but the save money step says, “Can I get a good quality used one? What about a different similar car? How much is going to cost me in gas and do I really drive enough for that cost to be significant?”

    Interestingly though, we both thought of the idea while trying to sleep.

  2. Aya @ Thrive says:

    I am the type of person that always checks the price and spends about a million years trying to decide if I should make the purchase or not. Very rarely do I buy anything without thinking everything you’ve mentioned through. Except when it comes to books. For some reason I can easily drop $12 for a book, even though I’ll only read it once, but I have to reconsider a T-shirt that’s only about $10 dollars more but I can wear a bunch of times. I think now with all our online resources to research and find better prices, we should be more saavy as shoppers – I know I try to be (I’ve stood in a corner at the Container store, looking up staples.com on my ipod to compare prices).

  3. I just went through this with my most recent purchase, Android’s G1 phone. It was rough shelling out the money for it but, like you said, I had done a lot of the research and got to the point where I knew I wanted it, I knew I had the money for it, and I knew I wanted it more than I wanted it.

    Plus it helped that M gave me that last push I needed!

  4. Donny Gamble says:

    The only question that I ask myself when making a purchase is how much money is it going to make me? If it doesn’t have a way that is going to make me money in the long run, 9 times out of 10 I won’t buy it.

  5. Somewhat similar situation to buying a product today, I have to admit that I tend to not pay attention to my finances (so says my GF). I got into a car accident today and it’s totalled and decided I never wanted to drive again, and just buy an apartment here in Nashville (I live in Cookeville about 1 1/2 hours away) to do business and be close to her, and I would take a taxi everywhere. Well, my GF (Amber, I think she’s a regular poster here?) told me I was being dumb and showed me in numbers how much of a waste of money that would be, even if my insurance does go up to $500 a month. So thanks to her and waiting for a cab today for 2 hours that never showed up, I think I decided to take half the money the insurance company gives me and buy a junker to drive and put the other half in savings. :) I’m proud of having such a smart girl >:P

  6. This is a pretty popular subject for a post. I wrote a similar post a few months ago Six Questions to Ask Before Spending Money.

  7. WealthBoy says:

    Another question to ask yourself is What would happen if I did not buy this? Rather than think about how much you might need something, it is sometimes better to think about how much you do not need it. Imagine yourself in the future without the product, whatever time frame you wish. Five days from now… Five years from now… Would you rather have the money in your pocket or the product you purchased? If you think about it in these terms, you may find yourself wanting to keep the money rather than the product.

  8. Jamie says:

    One more consideration: How does this fit with how my spouse and I have agreed to handle our finances? Is it in the plan? Even if all the answers to your other questions make it a go, if it’s not part of the plan, you shouldn’t do it.

  9. Nabloid.com says:

    I would say you worded your question wrong.

    “How much do I need the product?” should be changed to

    Do I really need the product and can I live without it comfortably and happily?

    You’d be surprised how much you can live without!

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