Making the decision to spend your hard-earned money should be worth more than a passing thought — especially when it comes to big purchases. And yet, people make purchases every day, whether it’s a beautiful blouse, the latest smartphone or even a new car. Often driven by immediate gratification or the subconscious (or conscious) desire to impress others, these purchases can harm your overall financial health if you are not in the right place to make them.
Learning to step back and reflect before making a big purchase is essential to staying financially stable and not burdening yourself with debt or perpetuating negative behavioral patterns. But how do you change these habits, especially if shopping this way is something you’ve been doing for a long time?
To get started, ask yourself the following six questions, as recommended by the financial leaders of the Kiplinger Advisor Collective. Below, they explain why these particular questions are so important to ask before making a major purchase and how they can help you make better purchasing decisions in the future.
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At what cost?
“‘At what cost?’ a question that cuts through the noise and gets to the heart of the matter. Your decision to buy something expensive isn’t just about money; it’s about everything — what you give up, what you gain, what you risk, how you feel and who you are. Ask yourself, ‘What is it worth?’ reveals the true nature of your decision and the trade-offs that lead to it. It’s a way to be honest and accountable to yourself and your values while resisting the seductive nature of consumer culture. — Kirsten Saunders, rich & REGULAR
Is it a need or a want?
“One of the most important questions to consider is whether the purchase is a need or a want. The next question is to consider how you will pay for this large purchase and its impact on your overall goals and objectives. Important to align your priorities and passions with your purchasing decisions.” — Margherita Cheng, Blue Ocean World Treasure
Does it align with my dream plan?
“It’s important to allow yourself to make a big financial purchase. Ask yourself, ‘Is this purchase consistent with our dream life and financial plan?’ If you follow your financial plan, and the purchase adds to your well-being, you will be investing in your present and future self. Your alignment question will help audit your purchase.” — Preston D. Cherry, Contemporary Financial Planning
The Kiplinger Advisor Collective is the premier criteria-based professional organization for personal financial advisors, managers, and executives. Learn more >
Can my money be used elsewhere?
“Do I really need this? Can my money be used elsewhere? The reason you should ask this question is that it helps you step back and look at the bigger picture as opposed to reacting to a more emotional type of situation. — Bob Chitrathorn, Wealth Planning By Bob Chitrathorn in Wealth Management Simplified
Why is this important to me?
“One question to ask yourself before making a big financial purchase or decision is, ‘Why is this important to me?’ Answering this question honestly will help you think beyond social norms, other people’s opinions and instant gratification to better understand the true value of a purchase or financial decision to you personally. Taking the time to peel back the layers of what you hope to have gives perspective on whether it’s worth it to you and truly something you want.” — Chiante Jones, Dollars and Change
What value will I get from this purchase?
“Determining whether a major financial purchase aligns with, helps achieve or is a distraction from your goals are good base-level steps to take. Deeper-level questions are: What value does this purchase provide, how will I feel about it and what ‘return on investment’ does the purchase bring or add to my life? Ultimately, is the investment ‘worth it’ to you and your family? — Lyndsey Monahan, Women Inspire Wealth
The information provided here is not investment, tax or financial advice. You should consult a licensed professional for advice regarding your specific situation.