Easy Ways To Make Decisions About Spending Money

Should I buy this?  Do I really need that?  Why can’t I purchase anything just for fun? 

For many people, shopping for themselves can bring on feelings of guilt, anxiety, and doubt.  However, the process of deciding what to buy this month, and what can wait until next month does not have to be so hard. 

What follows are some helpful tactics for when times are hard and money is tight. (Bonus: They will also help when money is flowing, as it will allow you to make purchases guilt-free!)

 

First things first…

Make a list organized into 3 columns:

The first column should include items you need. 

The second column should include items you want.

The third column should include items you wish for. 
 

Tips for identifying your needs vs wants

Let’s start by addressing those items you "need"…

When writing your needs list, you should take several things into consideration.  For example, before I write an item on my needs list I ask myself these questions:

• Will not having this item affect my health?
• Will not buying this item affect my children’s wellbeing?
• Will not buying this item leave me without my basic needs (such as food to eat, a coat, a pair of warm shoes)? 
• Do I not have this item already and if so, do I really need to replace it?
• Will not buying this item or service now cost me more money later (such as a home repair, or dental work)?

After my list is made, I then organize all of the items on my list in order of importance.

From there, I can begin to make purchases from my needs list, so long as I have enough cash on hand to do so. 

As more needs arise, I add them to the list in order of importance.

Now let’s talk about the "wants" on your list… 

Wants take second place to needs.  Especially during hard financial times, your needs should always take precedence over your wants. 

I define a want as most items that do not qualify for the needs list.  A want may be a second pair of black shoes, or a new purse when your current one is perfectly fine.  A want may be a new video game for your child.  A want may be live flowers for your dining room table.  A want may be a trip to the movies for our family of four. 

Without the ability to purchase items you simply want, your life will become dull, boring, and may even lead to depression, shopping sprees and binges.  Depending on my financial situation, I try to give myself one want per pay period.  When finances are very good, I give each family member something from the wants list. 

I do not, however, purchase wants until all of our pressing needs (like replacing a pair of too-small shoes) are taken care of. 

Finally, it’s time to address the "wishes" on your list… 

Wishes aren’t just those things that you will get if you win the lottery.  Wishes are things that with careful planning and savings can happen once a year, or once every 2 years. 

Wishes are things that you might get on birthdays, Christmas, or other special occasions.  For me, a wish would be a strand of pearls or a new diamond ring.  For my husband, a wish might be a trip to Jamaica.  For my kids, a wish might be a new computer or game system. 

In addition, if finances are tight, some wants may be upgraded to wishes, and some wishes may be upgraded to dreams.