As the seasons start to change, we are suddenly presented with all sorts of temptations to spend more money. Billboards tower above our commutes, magazines and newspapers line the checkout shelving, all promising new fashions and recreation activities. Under the constant pressure for our attention, and our wallets, we need to be extra vigilant. The basics of financial management remain constant despite the changing seasons.
Financial management is not a lesson in frugality, although that is often talked about as a popular Money Mindset. Financial management is actually making a conscious decision about where you spend your money. That means you making the decision to purchase or not, based on your own criteria.
If making an effective financial decision relies on your own set of criteria, how do you determine if a purchase is worthwhile?
As we are each unique, we are each responsible for determining our own decision criteria. The key here is that we think about what we value first. The alternative is that we will make split second decisions that aren’t always our own, but as a result of sales pressure and marketing manipulations.
How do we maintain our individuality while deciding our own criteria? The following set of four questions is an excellent starting point that I've found helpful:
- Can I afford this?
- What are my core values?
- Does this purchase reflect the values that I stated above?
- Will I still support my decision on this purchase a month from now?
Let's look at each question.
Can I afford this?
A straight-forward question, if the answer is no, don’t purchase. Avoiding spending above our means keeps us financially stable.
What are my core values?
Understanding what you find valuable is essential to making sound purchases. For example, I place a lot of value on my health and fitness. When considering purchases, I’m more likely to splurge on goods that improve my physical health.
Does this purchase reflect the values that I stated above?
Be honest on this one. Especially when under social pressure, this question can help you refocus on what you actually value, and not what the other friends you’re hanging out with value. I am far more likely to pick up a pair of supportive running shoes than the latest boat shoes, regardless of how “cool” I would look for the next two months.
Will I still support my decision on this purchase a month from now?
Asking what your future self will think is a powerful question regardless of the situation you find yourself in. This holds especially true when facing financial decisions. Many times our current self thinks we’ll make better choices in the future. How many times have we promised ourselves we’ll save more when that next raise comes in? We’ll donate to a worthy charity when the year end bonus comes through? Or we’ll take a self-development course that helps us grow just as soon as that tax refund check clears? It’s easy to think we’ll make better choices in the future.
But what happens when we flip that script? We ask ourselves if the right now choice is what we hope our future self would do.
Thinking about ourselves in the future, reflecting on the choices made before we make them provides us the right amount of clarity that just might save us from the next magic infomercial product collecting dust in the garage.
With the latest gadgets and gimmicks “new this year” released every season, we need to keep a careful eye on our impulses. Asking yourself a few simple questions can help you steer clear of the next big dust-collecting widget.
Can I afford this? Is this important to me? Will this be important to me a month from now?
In this way, we can spend on what we value, and save on those other impulse purchases marketed to us. We can make the most of the changing seasons, without suffering from seasonal spending woes.