How to Decide if a Purchase is Worth It

One of the best things you can do for your finances is to make mindful decisions about how you spend your money.

Too often, we just spend money without stopping to think, “Should I buy it?” Just having the money for something isn’t always a good reason to make a purchase.

Before you make your next purchase, consider the following questions:

Can You Afford It?

The most basic question deals with the affordability of a purchase. This is all about the sheer numbers.

Do you have enough money to complete the purchase? Or will you have to go into debt to buy it?

This is the first thing you need to ask yourself since you want to make sure that your purchase isn’t going to cause immediate financial harm in your situation.

However, this is just the beginning of your effort to determine whether or not a purchase is worth it. Just buying something because you can is not a solid foundation for long-term financial success.

Affordability is the first test, but you need to consider other factors when deciding if a purchase is truly worth the expense.

Is the Purchase Necessary?

You also need to determine if the purchase is necessary and does it fit within your current budget that you have set in place. Does it fulfill a need you have in your home or lifestyle?

Even if the purchase isn’t completely necessary, you can also figure out whether or not it is worth buying by its utility. Consider whether or not you will actually use the item in question, and how often you are likely to use it.

If it’s something you are likely to use only once, it can make more sense to rent the item or borrow it from someone else. Be realistic about how necessary and useful an item will be in your life.

Will Your Purchase Enhance Your Quality of Life?

Life would be disappointing indeed if you never used your money for anything but utility. Remember that money can also be a way to enhance your overall quality of life.

Even if something isn’t strictly necessary, consider whether or not it will provide you with enjoyment. Something that will provide you with hours of enjoyment can be worth the cost.

I like travel experiences. They introduce me to new things and broaden my horizons. I come back with great memories and good experiences. I don’t regret these expenditures since travel enriches my life. As long as I can afford the travel, I feel it is worth the cost.

Does the Purchase Fit with Your Values and Goals?

Don’t forget to measure your expenditures according to your values and goals. What matters most to you in life. I prefer experiences to things, so it doesn’t make sense for me to fill my house with items that I don’t really care for.

Figure out what matters to you, at your core. From helping others to making memories with your family to financial freedom, identify your core values. Then, determine whether or not an expenditure fits into these values.

Don’t forget about your goals, either. My contributions to my retirement account and my HSA are designed to help me build a solid retirement and a comfortable financial future.

If you have a goal to pay off credit card debt and live debt free, it might not make sense to buy an expensive new TV. Think about how the purchase helps you move toward your goals. If a purchase isn’t in line with your values or helping you reach a goal, say no.

Is it a Good Time to Make this Purchase?

There are certain times of year where some items are at their lowest prices. For example, there are sales that go on for major appliances throughout the year, but more times than not the lowest prices come out in November.

This is because new models are going to be hitting the shelves to start the new year. So the manufacturers offer amazing discounts at all the major appliance retailers.

If you know when something goes on its deepest discount and it is something that meets the other questions on this list, then it may be the time to pull the trigger. Which leads to:

Am I Getting a Great Price?

Getting a great price doesn’t mean you are just getting that item on sale. It should include multiple discounts.

Instead of settling for just a sale price, why not first check to see if a retailer has a cashback rebate with Swagbucks. Swagbucks has hundred of online retailers where you get a percentage back into your account, some as much as 10% during special promotions.

On top of that, you can then make your purchase with a cash back credit card. Some cards will reward you with as much as 5% cash back at certain locations.

Bundle these two options with a giant sale and rebate offer from the store and you could be looking at mega savings on something you needed anyway.

What Will You Have to Give Up?

If you aren’t going to go in debt for purchases (and, for the most part, you probably shouldn’t), you need to consider what you will give up to make a purchase. That $100 you spend today means that you have $100 less to spend on something else later. It makes sense to think about this reality.

I once looked at all the silly knick-knacks I had bought for no real reason, toted up the cost, and realized that I could have taken a trip to Europe with the money spent on those knick-knacks. That really put things into perspective for me.

A little introspection before you make a purchase can go a long way. How do you decide if a purchase is worth it?

About Post Author

Miranda Marquit

Miranda is a journalistically trained freelance writer and professional blogger working from home. She is a contributor for Mainstreet.com, Personal Dividends and several other sites.

See author's posts