Master Your Purchases
Episode #5 of the course Master your money by Jenn Schilling
Welcome to Lesson 5!
You’ve already created a budget that you’re sticking to, and you know how to start saving and paying down debt. Another way to manage your money is to reduce your spending—this gives you more money to save and invest or more money to pay down your debts. Tomorrow I’ll share some of my favorite money saving tips, but today we’re going to talk about making smart purchases.
To help decrease spending and increase the amount by which you live below your means, always consider needs versus wants when making a purchase. You can use the “Five Whys” before purchasing something: when you’re considering a purchase, ask yourself “Why?” five times to get down to the real motivation for buying the item; then you can decide if it’s really worth it.
Another useful tip for reining in excess spending is to think about the price of an item (or service) in terms of time worked—how many hours did you have to work to pay for it? Then you can determine if it’s worth that much time.
As I mentioned in Lesson 4, thinking about your long-term financial and savings goals can also help to reduce spending. Are you saving for a fancy vacation later in the year? Then remember that the next time you go shopping before you decide to purchase something.
One more tip for purchases is to save for and consider big purchases. For example, perhaps you would like a new TV, and you could afford to go out and get one right now. But before you do, take a week or so to think about it and make sure you really want and need a new TV. Then, if you find that you do really want and need a new TV, double check your budgets for the month and see if you can save some money from, say, your clothing and restaurant budgets to put toward the TV purchase. Big purchases don’t have to add to your monthly spending if you take time to plan them out—you can save money in some areas and then put those savings toward a big purchase.
The main idea here is to seriously consider your purchases before you start spending money. That’s the key to reducing your spending!
Tomorrow I’ll share some of my favorite money saving tips!
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