Wednesday, May 27, 2015

To Be Financially Fit - Purchase Modestly

The second trait of the financially fit is to purchase modestly.

Modest spending allows you to allocate more of your income toward goals and priorities, the areas making the most impact on your life.

Let’s look at why and how…

Why are you buying?

You’re shopping. You’re hitting the stores, Zillow, and Saturday markets. You’ve got money and you know what you’re looking for.

Or do you?

Have you really thought about the reason for your purchase?

Are you buying as a fashion statement (to impress your family and friends…or strangers)?

Or fulfilling a need (you need transportation to work, a means to call employers, or to meet a priority)?

Focusing on the reason and whether you’re meeting a need can help to ground you on your purchase.

Instead of just spending money - cost, brand name, and reason will be on your mind as you shop. This allows you to weigh your purchase price to what you could have instead – a weekend away or a down-payment.

Purchase equipment and toys as they’re needed.

Don’t go all out and purchase top-end equipment for a new tennis hobby – or any other hobby.

You may find you hate chasing the balls (which often go over the court fence) or you can never find a court open to practice. You’ve just wasted a lot of money on this lesson.

Instead, purchase as you go.

Buy a racket from Target (better yet, find someone to borrow a racket from or rent one), give the sport a chance. If you enjoy the activity, then slowly add pieces to your arsenal.

Shop around.

The exact frozen meals at WholeFoods can be purchased at other grocery chains for 25% less. Make (mental, paper, or electronic) notes the next time you’re shopping.

Can you find the same (or higher quality products) cheaper? Remember where and split your grocery list next time.

When talking to others, this one always surprises me. Many shoppers go to their favorite store and purchase everything.

Instead, my wife and I hit two or three stores (all near each other, so it’s not much more time) to complete our weekly shopping – finding organic produce, the same brands, and deals to save on food and home essentials.

Purchase a reasonably priced home.

Reasonably priced depends on your cash flow and priorities.

If your priority is to have your perfect house, where you plan to live for years and have your children grow up, then this may dictate spending a little more.

But if your priorities are financial independence, travel, charity, or retirement, then a high monthly mortgage payment decreases your resources available.

Challenge the standard “bigger is better” and “more expensive is superior” trends.

Why do you need those extra bedrooms and larger yard?

Do you have a large family at home or in-laws that visit frequently? Or is this space that will be unused most of the year, and be a chore to clean regularly?

Do you love gardening and a space to host outside parties every weekend? Or will you be spending your weekends weeding and mowing, instead of camping, traveling, and socializing?

The lifestyle creep.

Lifestyle inflation also falls into the purchase modestly category.

As our income increases, we feel like we need to own more expensive goods.

This is faulty logic!

When your income increases, you have more money for your priorities. This is where life is exploited!

Don’t live without.

Living and purchasing modestly does not mean living a deprived life.

You can enjoy a full life – even a more balanced life, in my opinion – without compromise.

If you focus on your needs, your reasons, and your priorities, then your life will feel be complete.

Remember, no matter how you decide to spend your money, you’ve made a choice. The (financial) power is in your control.

Do you purchase modestly? How so? What do you consider modest?

4 comments:

  1. believeinabudgetMay 28, 2015 at 7:35 AM

    I have definitely turned into a more modest spender, but that wasn't the case when I was younger. For the most part, I make smart choices when it comes to spending mostly because I plan ahead for everything! I always shop with a budget in mind and have a good idea of what I want. Otherwise I enter the danger zone and will end up overspending.

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  2. Thanks for sharing! Having a budget does help to remove the temptation of overspending.

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  3. Great list. We'd add: when you do buy something, buy quality. Too many people buy cheap crap in the name of frugality, and it doesn't last long. Then you have to spend more to replace it (nevermind that the original item goes into the landfill and more resources are needed to make the new thing.)

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