How to decide on what to spend your hard earned money

Your buying options are endless and there are so many pushes and pulls! Industry spends so much on advertising, some direct and some subliminal, and there is NO way NOT to be influenced. And if you manage to maintain some level of discipline, you can’t guarantee that those in our family will. Ever heard of the children’s book "The Bernstein Bears Get the Gimme’s"? Well, I know that my little bears get the gimme’s all the time and it is not so easy or pleasant to be the one to say "no". More than that, maybe you do not want to be that kind of person. Maybe you want to be able to get yourself and your family whatever they want as long as it is within reason.

OK. So the first thing to do is to determine what is within reason and what your limits are. You can look for the answers in your monthly budget. How much disposable income is left over after all your fixed expenses are paid for? Also, you should include a category in your budget for purchases that you want to make "Just Because".

Once you determine how much you have to spend, you can then focus on priorities.

Deciding on priorities is easy: Determine if the item is NEEDED or WANTED. A NEEDED item is one that you can’t manage without and a WANTED item is one that is "Nice to Have" or "Just Because. Of course, the items that are NEEDED have a higher priority than those that are just nice to have.

Once you have determined that the item is NEEDED, then check if there is an alternative. An alternate can be a different item that has the same function or the same item by a different manufacturer or supplier. Always look for the best deals with the best quality for price ratio (a lot of times something cheap turns out to be quite expensive in the long run) – but don’t spend too much time exploring your options. Time is money, too.

If you determined that the item is "Nice to Have", then check how much money you budgeted in the "Nice to Have" category of your budget. If you have enough money then go for it, but remember that if you do buy it, you may not have enough money left over in that category to buy something else that is "Nice to Have". What are the opportunity costs for spending now? Is it worth it?

It may seem as if this is time consuming process, however it’s not. Mostly the matter is solved as soon as you ask yourself if the item is NEEDED or WANTED.

Happy spending!

Mindy