You know the feeling. You open your credit card statement, and the large purchase catches you by surprise. You remember making the purchase, but now that you see it in print you get a not so good feeling in the pit of your stomach.
We’ve all been there, and we’ll likely be there again. The question is how do you avoid allowing such circumstances to go unchecked and lead to debt? There are certain questions you need to ask yourself before making a large purchase.
You may not need to ask yourself each question, as it depends on the circumstance. A “big” purchase is also relative. It may be $50 for you or $1,000 for someone else. It all depends on your budget and what you consider to be a large purchase.
1. Do I Know Where the Money is Coming From?
This is by far the first question you should ask before making any large purchase. In short, do you know how you’re going to pay for the purchase? This doesn’t mean you play the swipe and hope game when making the purchase – hoping you’ll have the money in a month when you get your credit card bill.
If you’re playing the swipe and hope game, it’s one you need to give up. No purchase is worth going into credit card debt for. If you know where the money is coming from, great, but if not it’s time to move on.
2. Does Amazon Always Have the Best Price?
I love me some shopping on Amazon. I love that I can sit in my office, in my pajamas, and buy almost anything I want on Amazon.com and have it show up a few days later. Not only do they have great prices, but it’s just so dang convenient.
There’s one small problem – Amazon doesn’t always have the best prices. While there are many ways to save money on Amazon, they aren’t always the cheapest. So, if you’re considering a large purchase on Amazon, make sure it’s the best price available.
3. Where Will I Put the Item?
I used to never ask myself this question, even after reforming my free-spending days. If we had the money for a particular item, we gave little thought to where we’d put it. That’s no longer the case, and it has helped us find a better balance between minimalism and wanting more.
We now ask ourselves some of the following questions before making a big purchase:
- Where will the item go?
- Is that space already crowded?
- Can we put that space to better use?
Honestly, if we don’t know the answer to the first question, then it’s likely we don’t need the item. By asking yourself that simple question you may be able to avoid spending money you don’t need to spend.
4. How Else Can I Spend this Money?
This is an incredibly important question to ask yourself before making a large purchase. Ask yourself if you have any glaring responsibilities you haven’t been able to put money towards yet. Money is a tool, and you want to make sure you maximize how you use it.
Have you put aside money for retirement this year? Do you have a big doctor’s bill you need to pay? Are you wanting to go on vacation later this year but don’t have enough saved yet? If the answer is ‘no’ to any of those questions, you may want to reconsider the large purchase and focus on your goals.
5. Can I Earn Rewards For This Purchase?
This may seem like an odd question, but it is one we ask ourselves before we make any large purchase. We love to earn rewards points so we can travel for free, or at a significantly reduced cost, which requires maximizing our rewards points.
Many people we talk to think it’s difficult or not possible to earn rewards to make free travel possible. It’s most certainly possible and not that difficult if you have a simple plan. Click here to explore some of the best rewards cards available and see what you can earn on a large purchase you’d already be making anyway.
6. How Often Will I Use the Item?
In some cases, you may only need an item once or twice and never use it again. This can make for an even more expensive purchase if you only plan to use it a handful of times before it just sits there to collect dust.
If it is something you may only use once or twice then look into renting the item or borrowing it from a friend or family member. You may even be able to trade services to account for any cost involved. Whatever you end up deciding, do the math to make sure your decision makes sense.
7. Can I Wait on the Large Purchase?
It’s easy to get caught up in your emotions when you’re in the store or surfing online. You see the bright, shiny item and you just want to buy it now. Don’t let emotions get the best of you; take a step back and ignore them for a period of time.
You may have heard about the 24 or 48-hour rule with personal finance. This is where that comes from. If it’s not a do or die type of item, walk out of the store and give yourself 24 or 48 hours to see if you can live without the item. Heck, you can even go 30 days if you want. If you see you don’t need it at the end of the time, you’ve saved yourself some money.
However, if you find you do need or want it at the end of the period and have the money for it, you can buy it with confidence. This is a great way to regain control of your money and make sure purchases are in line with your values.
8. Can I Get it at a Discounted Price?
This is a great question to ask before making any big purchase. The last thing you want to do is spend more money than you have to. The first thing I do before making any large purchase online is check Rakuten to see if I can get cash back for the purchase.
*Related: Need to furnish your home for less? Read our guide on the best discount furniture stores to score awesome deals.*
If I can, then great. If not, I continue to shop around to find the best price. Just make sure you don’t spend too much time to only save a few bucks as you really lose any savings to lost time.
9. Are There Used Options Available?
This question likely should follow question #6. If you find that you do need the item, ask yourself if there are used options that will work just as well. I’ve found that in many cases the used version not only does the same job but it can also save a good chunk of money as well.
You can do this for many items, from tools to furniture to clothing and much more. Places like Goodwill Stores are a good option as is the Habitat for Humanity Restore for larger items like tools or other items for your house.
10. How Much Time Did it Take to Earn This Money?
This is a question I adopted soon after starting to pay off debt and is one we still use today. It’s quite simple – you figure out how much time it took you to earn the money you’re about to spend. We don’t have a set number of hours that a purchase has to stay under to qualify, but it helps us think through how we feel about that time going towards the item.
Think of it this way. I’ve read that it takes anywhere from 30-45 minutes of exercise to burn off the calories from eating a donut. If you’re not willing to do that work and forego the donut, then it’s possible you’re willing to forego the large purchase. This exercise helps give you perspective on the argument of whether or not you want to trade your time for that specific item.
11. Is This a Replacement Item?
One of the faults of frugality is that it’s easy to think a cheaper item is the best one. That may be the case in some instances, but not all the time. In many cases, the cheaper item isn’t high quality and thus will likely break sooner.
If you’re replacing an item, ask yourself if you’ve looked at how to fix it. If so, do you think the new item will last longer? If not, have you looked on YouTube to see if there’s a video showing you how to fix the very item you’re looking to replace?
I can’t tell you how many times we’ve thought we had to replace the item only to find a video on YouTube that helps us fix the item in 15 minutes and saves us money.
12. What is the Return Policy?
Some stores have great return policies. That’s why we love shopping at Costco. One of the best money saving Costco hacks is their return policy; they take virtually everything back. We make many of our big purchases at Costco just for that very fact.
Not every store is like that, unfortunately. Make sure you understand what the return policy is. Make sure they will even take the item back and that it’s not simply for store credit, but that you get your money back. Find out if there is anything they won’t take back. Costco, for example, won’t take back many electronics after 30 days. You want to know that before making a large purchase.
13. Do I Really Need the Item?
Knowing if you have the money is the most important question to ask before making a large purchase. Knowing if you really need the item is a close second. I ignored both these questions in my free-spending days and it lead to massive debt. Looking back, it simply wasn’t worth the frustration and heartache.
That being said, it doesn’t always come down to a need – especially and only if you know how you’ll pay for the item in question. You may just simply want the item, and that’s more than okay, assuming you have the money to buy it. The point is to check yourself before making the purchase, so you go into it knowing where you stand.
What are some other questions you ask yourself before making a large purchase? What, if any, visual cues do you keep around you to prevent needless spending? What’s one weakness for you when it comes to spending and how do you try to curb it?