When it comes to spending money, we all need a little guidance sometimes so I’ve put together 5 questions to ask before spending! It’s my hope that this series will provide you with practical questions to ask when preparing to spend a substantial amount of money (or any amount of money). Hopefully, these practical questions will help you truly understand the enormity of the decision and help you make the decision that is best for you and your family.
QUESTION 1: Is this a want or a need purchase?
This might seem like a basic question but do you really need this item? As a “spender” I can get caught up in the “I WANT THIS!” mentality and never stop to ask, “Is this a want or a need?”
My garage is full of “I want this” items that we never use. EVER! This includes a RC Airplane (it’s cool – but I don’t use it), bike (never ride it), tennis rackets (once every 3 or 4 years), and many other items.
Pausing to ask “Is this a want or a need purchase?” can prevent a lot of poor spending decisions. I’m not saying that I never purchase things that are pure “wants”. I am saying that when I ask this key question, I make much smarter overall decisions.
QUESTION 2: Will this item INCREASE or DECREASE in value?
Asking this simple question can also help prevent a lot of poor spending decisions!
Chewing gum goes down in value. So do cars, 4-wheelers, refrigerators, swimming pools, and clothes. Business can go up in value. So can houses, land, antiques, mutual funds, company stocks, bonds, and intellectual property (patents, licenses, etc).
Here’s what I know: Not all of your purchases can be for items that increase in value, but if ALL of your purchases go down in value – something isn’t right!
Join me tomorrow for questions 3 and 4!