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.
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