5 Questions to Help You Spend Smarter


The frivolous days of “I want that, I’m buying it,” don’t have the same whimsical cachet they once held.

(Seen the comedy Confessions of a Shopaholic? Neither has anyone else.)

Today’s shoppers have to make smarter choices at the cash register if they want to meet their long-term goals and to save for their dreams.

“We’ve been in an era of excess spending, but now families need to determine what they have,” says Lois Smith, a consumer and family economics educator at the University of Illinois Extension. “You can’t control your finances if you don’t have a handle on how much you have.” Once you determine your personal or family goals and how to adjust your budget to meet those needs, then you’re ready to shop, right?

Not yet. Smith recommends asking yourself these five questions before you go shopping:

Question 1: Will this purchase meet my family’s goals?
If you know where you need your money to go, choices become a lot easier, says Smith. “When you’ve determined what direction your family is moving, you’re able to weigh the true importance of every purchase,” she says. So if your objective is to get rid of debt or buy a new car, nabbing a new blazer (even if the Chanel number you’ve been stalking since fall finally goes on sale) will take you away from your needs, rather than toward them.

Question 2: Is this purchase a want or a need?
Needs are easy: basically anything that keeps you surviving (think food, shelter and basic clothing needs). “When the economy is great, no one plans their spending, because money is flowing,” Smith says. “Most of us don’t even consider want versus need when buying.” Set priorities. If the purchase is important to the family, treat it like a goal and plan for it by setting aside a small bit of money each paycheck.

Question 3: Would I make this purchase if I paid in cash?
“It’s easy to mindlessly put a purchase on a card because it’s convenient and immediate, but you’ll save more money in the long run if you save and buy with cash,” says Smith. “But once you’ve put the item on your credit card, you’re using your future income every month to pay it off.” Case in point? If you charge your dream flat screen for $5,000 at an 18% interest rate, and pay the minimum 4% balance each month, it will take you around 10 years—and another $3,000 in interest—to pay it off.

Question 4: Do I have to have this purchase brand new?
Taking advantage of thrift stores, rentals and barter is a great way to buy something you may want, not need, at a bargain price. This is the best strategy when you plan to use an item only once or for a short time, says Smith.

Question 5: Is this a planned purchase or an impulse?
Impulse purchases are usually heightened by high pressure sales tactics that make you think you’re about to get the deal of the century on an item that is too good to pass up now. “Planned purchases should be tied to your goals,” advises Smith. “If the pressure is put on you—a salesperson gives you an hour to decide to buy or an online site puts items on sale until midnight—walk away.” In today’s retail environment, nothing is so amazing that you have to have it immediately, or you can’t find it at another e-tailer, boutique shop or department store. Impulses, and your credit cards, should be checked at the door.



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