Money can’t buy happiness, it’s true, but knowing how to spend your money on purchases that are truly worthwhile can definitely improve your life. To make sure you’re making the best decisions about what to buy, not just buying on impulse, it can help to ask yourself some questions first.
When you pause to reflect on why you’re about to buy something, not just what you want to buy, it can help you to think clearly about the real value of the item at hand: Is it really worth taking money out of your budget to spend on X, Y, or Z? This will not only help save money it can add to your enjoyment of life, research has found.
So while money itself can’t buy you happiness, knowing how to spend your money the right way for you and your values certainly can.
Making a Purchase While Budgeting
Can you buy yourself things when you’re on a budget. Of course! That’s what a budget is: It’s a plan for spending (and saving) money. Even if you don’t follow a particular budgeting system, you only have so much money to spend once you’ve covered your bills and basic expenses. So you need a balance. By building a monthly budget, you’ll have a basic plan in place for your spending that gives you a framework for how much you have to spend — and how much you don’t.
If you’re new to a budget, you can look at this article on making a budget for beginners. It can help you run some numbers so you get used to knowing how much you have to spend on essentials, and how much is left over for fun.
There are several types of budgeting techniques you can use to make a plan for your money each month. Try them out as an experiment to see which one works best for you.
Questions to Ask Yourself Before Buying Something
Knowing a few good questions to ask yourself before you buy something can help you spend according to your values, and cut down on purchases you’ll regret later. After all, the last thing you want is to spend money on things that don’t really enhance your life — and may add to your debt (especially if you’re already paying off some debt).
Is It Okay to Make an Impulse Buy While Budgeting?
Yes. Disciplined spending is an important part of budget management, but if your budget is too restrictive, it may backfire. You need some wiggle room. Some may call it “fun money” or “blow money,” but an important element of your budget can also be setting aside money you can spend with a clear conscience.
When your fun money is planned for, it makes it both gratifying to spend it and less likely than you’ll blow your budget altogether on impulse purchases. Plus, setting aside a small stash of money that’s explicitly earmarked for impulse buys means that you can definitely splurge now and then — without guilt!
Is This a Want or a Need?
This is one of the important questions to ask before buying anything. You’ve probably heard that you need to distinguish between wants and needs when spending. One budget option you can consider is the 50/30/20 rule. Advocates of this rule suggest that 50% of your budget can go toward needs (or essentials), 30% toward wants, and 20% toward savings.
By asking yourself if the item you want to purchase is a want or need, you can plan for it appropriately. Making this distinction is an important step for long-term financial planning.
What Do I Gain From Buying This?
Research shows that when people spend money on things or experiences that mean something to them, that reflect their values, they’re more satisfied. So one of the questions to ask before buying a product is what you’ll gain from it. Some items bring more convenience to your life. Others bring comfort, enjoyment, and others are just plain essential.
If an item won’t bring anything additional or important to your life, do you really need it? When you’re learning how to control your spending habits, focusing on your goals and priorities can be effective.
Is This Something That Will Sell Out?
More often than not, the items that you’re thinking of buying will still be available at a later date. You might feel the urgency to buy from a salesperson, or because the price is so low, or the item seems particularly special.
But often you can postpone purchasing something and either find it again (if you really want it), or you may discover it doesn’t matter. Sometimes, when you wait, the desire for something fades, and you may realize it wasn’t as vital as you thought.
Taking time to weigh a purchase can save you a lot of money, and possibly some regret (and clutter).
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Can I Get It Used or on Sale?
“Never pay full price” is the rallying cry of a certain type of savvy shopper. And there are a couple of ways to accomplish this.
Buying used consumer goods can save you 90% or more. While it doesn’t always make sense to buy used, there are a plethora of goods on the market that are in like-new condition at a fraction of the cost. New-to-you goods in excellent condition can include everything from cars to ski equipment to clothes and accessories.
Take baby gear, for example. For many, baby gear is only needed for a short time before it’s outgrown. This includes changing tables, cribs, strollers, car seats, jumpers, bouncers, feeding supplies, clothing, and more. Buying all of these items brand new will put a hefty dent in your budget. However, these items are widely available at super-low prices. Many people give away used baby gear when their children outgrow it — and it’s often in good shape.
And you’re not limited to second-hand stores and yard sales. These days there are national chains of consignment shops and Good Will stores that maintain higher standards.
While buying used is not everyone’s cup of tea, buying on sale should be. These days there are websites and apps that can help you do price comparisons to find the best price for items. Some apps may help you find items where the price has just dropped.
Deciding to “never pay full price” isn’t always possible. But if you try to follow that mantra even half the time when you shop, you could end up with better quality goods and spending a lot less for them.
Do I Own Something Similar?
If you take a look at what you already own, you might be surprised to find duplicates of several items. Buying the same or similar items is totally understandable. We all know what makes us comfortable, what we tend to wear or like — so we gravitate to similar-looking placemats, sandals, and so on.
Fortunately, this misstep is easy to prevent. Before you shop, or think you might be in a shopping environment, glance through your closet, your linens, your garage. If you already have several coffee mugs that are similar, or jean jackets, or if you know you have a weakness for PJs or storage baskets — reminding yourself in advance of your blindspots can help you save.
Why Do I Want to Buy This Now?
Sometimes there is a clearcut reason to make a purchase, even an impulse purchase. You might be at a store and remember you need bandaids. Or you might decide to buy a tool to make a repair that’s been on your mind. But if there isn’t a clear reason, it’s time to examine your state of mind.
Are you buying out of boredom or anxiety? Are you being influenced by your friends or what you see on social media? Being aware of why you want to buy something can help you decide whether or not it adds enough value to your life.
How Often Will I Use This, Really?
Something that will get used often may be more valuable in your life than something that is used infrequently. Sometimes, impulse purchases look really cool, but if it’s not something you’re going to use on a regular basis, you may want to re-think buying it.
Will I Regret This in the Future?
Try to picture the item you’re wanting to buy after a few years of use. Is it of good quality and will it hold up? Will it go out of style quickly? Some items are not worth it in the long run, and you don’t want to regret spending money that you can’t get back.
Would It Be Better to Put the Money Elsewhere?
If you can ask yourself this question, then you’ve arrived. You’re wondering about things that are more important than what’s in front of you. You’re considering how to control spending habits, and also what’s really important for you and your family.
You’re on your way to better budgeting!
Pausing to ask yourself a few questions before buying something you want can help you spend within your budget and, most important, align your values with your spending. Simple questions like: How often will I use this? or What do I get from buying this? are simple ways to refocus on what’s really important to you. After all, time and money are limited. You want to be careful with how you spend, and balance the pleasure of buying things you need or want with equally important concerns: Does this purchase make sense right now or can it wait?
One question should be easy to answer: Do I have the money for this? Everyone deserves a little fun money, so set up an account that helps you save for things you want — without breaking your budget. When you open an online bank account with SoFi, you can enjoy an all-in-one Checking and Savings with no fees, automatic saving features, and when you set up direct deposit you qualify for no-fee overdraft coverage and a competitive interest rate.
How do you determine if you should buy something?
Ask yourself a few pointed questions, including whether you have the money (and whether you could find a better price); what this particular purchase would really add to your life; and whether you could do something better with the money.
Should a budget include flexibility for impulse purchases?
Yes. Some experts would argue that having some type of allowance for impulse purchases can help you stick to your budget. Building in flexibility to your spending plan can help you stick with it.
Is it OK to buy yourself something nice?
Yes, but it will feel better if you’ve budgeted for it ahead and time and pay for it with money you’ve already set aside. Also consider adding a “fun money” category in your budget so you always have a little stash of cash for a spontaneous splurge.
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SoFi members with Qualifying Deposits can earn 4.50% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.
SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.50% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.
SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.
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