Do you struggle with buying things you later regret? A good place to start could be Money Saving Expert’s Money Mantras. If those aren’t enough for you to change your way of thinking, here are some questions to ask yourself.
Am I buying this on an impulse?
Set yourself time-based limits when shopping. Try adding it to your basket and leaving it there for 48 hours. Do you still want to buy it?
You might want to break this down further based on the value of the item; More than £50, wait a week. More than £200, wait a month. Only you will know what amounts work for you and your finances.
Sometimes the delay will make you realise you didn’t care about buying it that much in the first place.
Would this item actually add value to my life?
It’s easy to convince yourself you need the latest gadget or toy, but ask yourself how much value you’ll actually get from buying it. Often we already own something that will scratch the same itch; this is just an incremental upgrade at a considerable cost.
Where am I going to keep this item?
Making compulsive purchases can lead to a crowded home. Try visualising the space this item will take up.
Ask yourself, what would I be willing to remove from my life to make room for this? Consider donating or selling something first. Bonus points if you manage to sell something to pay for your new purchase.
How much of my time do I have to give up to pay for this?
If you’re on a fixed salary, first work out your rough hourly rate. This will let you calculate the time-cost for your purchase. Was it really worth working 40 hours a week for a month, just to buy some new technology that you’ll want to replace within a year for a newer model?
Could I use this money towards a meaningful experience instead?
Realising that the same money could pay for an adventure can be pretty powerful. Usually, our experiences bring us a lot more joy.
Alternatively, you could substitute this for buying an online course to expand your learning.
Does this fit into my budget?
If you’ve checked out our budgeting guide and use some form of envelope system, or software like YNAB, you’ll know that buying something takes money away from something else. The money in your account is finite, so be aware of what you’re sacrificing first.
Paying yourself first means making sure to transfer money to your savings and bill accounts/pots before spending your “fun money”. It’s probably the simplest way to budget and can be a good way to get started.
What recent purchases can I compare to this one and how do I feel about them now?
Chances are you’ve bought something similar within the last year. Does that purchase still provide value? If not, what makes this one different? Do you already have something that could scratch this desire that you’ve forgotten about?
How much would the same money invested and compounded earn me?
Assuming 5% growth, a top-spec iPhone would grow £396.42 over 5 years and £3,471.33 over 25. Is it worth it? If so, great!
Do I really need the latest and greatest flagship model?
If you’ve made it this far, you probably do need to buy the item you have on your mind. But you should consider whether you need that particular one. A lot of the purchases we make we convince ourselves that by spending more now we will need to spend less in the future. This isn’t always true and can often be a bit of a fallacy. Buy it for life is a nice idea but isn’t going to apply to a lot of your purchases. If this is a new hobby, consider starting out cheap to confirm you do actually want to stick at it.