You’re drooling over the idea of a tropical vacation. You’re weighing options for your kid’s education. Maybe you just hate everything in your closet.
Before you buy, figure out whether it’s time to splurge or save with these six questions.
What value will you receive from the item or experience you want to purchase?
Does spending mean you’ll have increased safety? Greater peace of mind? Fewer repairs down the road? Or are you paying more than something is worth to you?
Say you’re buying a home. One will cost you $100k, while another will set you back $300k. Ask yourself this question: does the pricier home offer at least an extra $200k in benefit? That might translate to much-needed living space, access to great school districts, proximity to family, or other qualities that are important to you.
In determining what your potential purchase is worth to you, it’s critical that you look at what you’re giving up to buy it. Your decision to spend or splurge determines how much money you’ll have available for your other priorities.
Do you want to give your kid one expensive birthday gift or four frugal presents? Will you shell out for expensive private schooling if it means years of belt tightening and student loan debt?
It’s time to think outside the box.
Want to pick up some music, DVDs, or video games? Instead of heading to the mall, check the selection at your local library. Borrow new-to-you entertainment and educational materials.
Want to try out a big-ticket item before you buy? Or are you hoping to use something pricey for just a short time? Consider renting. Get temporary access to formal wear, cars, boats, vacation homes, musical instruments, and more without paying full price.
If you always buy brand new, you’re throwing away money. At the same time, consistently choosing second-hand goods can lead to bad deals and even health and safety issues. Inform yourself before you purchase.
Avoid used items that can breed bacteria – mattresses, upholstered furniture, and helmets. Steer clear of borrowed baby gear like car seats and cribs, which may not meet current safety standards.
Buying used, however, is a great tactic for saving on the latest gadgets, cars, dishware, wood furniture, and even pets!
Ready to part with your money? Check that you’re not overspending.
Before heading to your favorite online or brick-and-mortar retailer, do some comparison shopping. Look at competitor prices, as well as the availability of print coupons, coupon codes, and discounts from organizations to which you belong.
Here are a few little-known savings secrets:
It’s time to take a peek inside your wallet.
Will splurging eat into your ability to pay your bills? Build your emergency fund? Save for retirement? If it does, you might need to find a thrifty alternative or put off your purchase.
On the other hand, if you’ve got the money, now might be the perfect time to spend!
It’s time to stop worrying about your spending decisions. The next time you’re ready to make a purchase, run down this easy checklist. You’ll feel confident that you’re making smart money choices for you and your family.
Megan Nye is a freelance writer who crafts personal finance and lifestyle content for businesses, blogs, and publications. Her clients include The Huffington Post, The Penny Hoarder, The Dollar Stretcher, MindShift.money, Vibrant Life, Dealspotr, ChimpChange, and Money Saving Mom.