I was recently at a store with my three-year-old son and I told him going in that he could pick out one item. He wanted something that was Iowa Hawkeye-related (proud Dad moment). As we were browsing the toy section, he found a Lego set that was in the shape of a football helmet with the tigerhawk logo on the side. I looked at the price, and it was $25. I was not going to spend $25 on a Lego set that would entertain him for 15 minutes then collect dust on a shelf in his room, so I suggested we look for something else. He found a plush Iowa football that was $4. Sold! Not only was it much cheaper, but I knew we would get much more use out of it! Sure enough, we played catch in my apartment repeatedly throughout the weekend and I know we will do that many more times this winter.
This experience with my son got me thinking. How do I make purchasing decisions for myself? Do I buy things just because I want them, or is there lasting value to those items? I spend money every day. About half of my spending is on necessities (rent, utilities, groceries, gas, cell phone, etc.), and the rest is discretionary (restaurants, entertainment, travel, shopping, etc.). As I create my budget and track my spending, I have learned over time what I really value in life.
When I make discretionary purchases, I try to look beyond the instant gratification and determine what it is that I am really buying. For example, when it comes to eating out, I have learned that sometimes it is for the delicious food or drinks, but other times it is just for the social aspect of it. If what I really want is to be social, I try to make dinner at home and invite friends over.
I heard an idea once about controlling the purchasing of “big-ticket” items. When you want to buy something that is over a certain dollar amount, write it down on a list and wait a week or two. If you have something else come up that you want to buy over that amount again, you have to go to that list and cross out the first item to write down that new item. What this does is force you to think long and hard about buying something instead of falling into the trap of instant gratification.
As this year wraps up and the New Year begins, why not try coming up with some rules/guidelines like this to help create structure around your spending decisions. Do you have a good way to keep track of your spending? How do you make these decisions? This might be a good New Year’s resolution to tackle this coming year!