The Bard of Avon used a lot of words…some of them apply to personal finance.
ACT I
Here’s much ado about something: Shopping has become a national pastime, as American as baseball, apple pie, and credit-card debt. In the brick-and-mortar world of retail stores, consumers are drawn in by oversized window displays, perennial sales, and the promise of an entertaining (and sometimes escapist) shopping experience. This shopping seduction has now shifted to the online space, where we are lured by the siren song of enticing visual images, seamless digital efficiency, nearly limitless choices, and instant gratification. Whether online or off, retail therapy and the shop-‘til-you-drop mentality (a rose by any other name) are mainstays of the American shopping experience.
On top of all this, there are billions of dollars spent every year on targeted marketing, clever advertising, embedded branding, and PR campaigns designed to do just one thing: to get you, the American consumer, to part with your hard-earned money (ah, parting is such sweet sorrow) in exchange for a product (including things you may not even need). Could it be that there is something rotten in the state of retail shopping in America, or are there ways to make sure that you will only buy an item when and as you like it?
ACT II
‘Tis one thing to be tempted…Another thing to fall.
One way to keep from falling for the shopping temptress is to practice intentional consumption: Think before you hand over your wallet (or swipe your phone or insert your chip). Resist the urge to buy on impulse. Spontaneous shopping decisions are rarely the right choice. The smarter strategy is to buy with intention. (Otherwise, it’s the equivalent of going to the supermarket hungry and buying things you don’t even need.) Make a list and stick to it. Don’t rush. Compare prices. Think before you buy.
ACT III
Whether you are shopping at your local Walmart, ordering on Amazon, or buying from The Merchant of Venice, here are VII questions to think about before you decide to make a purchase:
Scene I: If you are using a credit card, can you pay for the item in full when the bill comes? (That is the question.)
This is an easy one. If the answer is “no,” then you shouldn’t be buying that item. (Unless the item is something you truly need—see need vs. want below—such as pharmaceuticals for your health, clothing for an interview, or gas for your car so you can drive to work.) Using a credit card is not an alternative to being able to afford the item; it’s just a convenient payment method (with perks) so you don’t have to carry cash or checks everywhere you go.
Neither a borrower nor a lender be.
(If you can’t pay your bill in full, you can’t make the purchase. That is the answer)
Scene II: Is this something you need or something you want? (That is the question.)
Another bright-line rule you can apply is to ask yourself if the item is a necessity or just something you desire. Is it a need or a want? If it is truly a necessity, then you will have to find a way to pay for it, even if that means using a credit card and paying off the balance responsibly. If the item is just something you want but don’t really need, that is a different question.
If you have a budget to keep track of your spending, take a look at the 50/30/20 rule (50% of after-tax income for needs; 30% for wants; 20% for debt repayment and savings). If the item you want to buy is truly a necessity, then you should find a way to make it fit into your 50% allocation for needs. If it is just something you want and the purchase would fit within the 30% budgeting parameters that you have set up, you should be able to buy it (if you really want it). If, on the other hand, buying this item will blow through your 30% for wants, then it’s in the “not to buy” column.
Why, then, can one desire too much of a good thing?
(Necessary expenses are mandatory; discretionary expenses are optional. Don’t confuse the two. That is the answer.)
Scene III: Will this purchase bring you just a momentary blip of joy or serve a longer-term purpose? (That is the question.)
Eric highly recommends Marie Kondo’s The Life-Changing Magic of Tidying Up. Her theory is that you can declutter your life, and consequently your mind, by only holding onto the things that bring you joy. Think about your purchases similarly: Is this something that will provide momentary joy or something that will have meaning or serve a longer-lasting purpose in your life? If you think like this, you can more effectively tune out the advertising noise and focus on making purchases that will bring you joy beyond the immediate moment.
(That is the answer.)
Scene IV: Are you just being tempted by the impulse aisle? (That is the question.)
Stores are smart and know where to place certain impulse items to catch your attention at just the right moment. Resist the temptation!
Did you ever notice the type of products that stores place at or near the register? These small impulse items sometimes have what look like low prices, but they might turn out to be the items with the highest markup. They could be products that you never would have thought to seek out on your own. Or they might have bright, inviting packaging with very little substance inside.
Whether these impulse items are food products at a supermarket check-out aisle, accessories at a department store cash register, or other products at the front of a small specialty store like a toy store or clothing boutique, these grab-n-go items placed at the end of your shopping trip are designed to catch you when you are rushing to finish the transaction (and don’t have time to comparison-shop or even think about the purchase—especially if there is a line of people behind you). If you see something at the register that you want to consider, step out of the line and do your due diligence. Or just put the item on your wish list for next time. Don’t let the infamous impulse aisle tempt you to buy something you don’t really need.
The tempter or the tempted, who sins most?
(Don’t buy on impulse. That is the answer.)
Scene V: How long will it take you to work to afford this item? (That is the question.)
One way to make a decision about whether to buy a product is to think about how long you have to work (in hours) to earn the money (after tax!) to pay for the item.
Suppose you are walking past a store and you notice something that catches your eye. Instead of rushing in to buy it (because you think you “have to” have it), take a look at the price and think about the number of hours you would need to work to earn enough money (after taxes) to pay for that item. When you analyze the item as a trade-off for your actual time, you might decide that it is just not “worth” it to you. Are those shoes really worth two days of your labor? Do you love that framed poster of Andy Warhol’s Campbell’s Soup Cans enough to trade it for 20 hours of your time? (That’s the whole point of the soup cans: mass-produced, identical objects in a consumer/consumption-obsessed society.) You get the idea here: Looking at purchase prices in terms of your own time worked can put a whole new spin on the “value” of the things that you choose to buy.
(You have to work for what you get. So make sure what you buy is worth the money. That is the answer. And remember: All that glitters is not gold.)
Scene VI: Can you “put it on ice,” i.e., wait a while to help you decide if you really want to buy the item? (Some people literally freeze their credit cards in ice.) (That is the question.)
If you find that you are prone to making rash buying decisions, especially on large purchases, consider implementing a kind of “waiting period” for yourself. Try forcing yourself to leave the store or hold off on the purchase until you have “slept on it.” Days or weeks later, you might still think it’s the right thing to buy or you might wonder what you were thinking. Your own personal waiting period can be one hour, one day, one week, or even one month or more, depending on the item as well as your own needs and personality type.
If you want an automated way to force yourself to have time to think over a purchase before buying, check out Icebox from finder.com. Icebox prevents impulse shopping by replacing your “Buy Now” button on e-commerce sites with a “Put it on ice” button. When a product is put on ice, it gets added to your Icebox and a cooling period begins. You can only buy the product after a certain amount of time has elapsed. They recommend a 30-day cooling period, but you can customize that to any amount of time that you want.
I am to wait, though waiting so be hell.
(Patience is a virtue. Wait before you buy. You might discover that you don’t really want the item after all. That is the answer.)
Scene VII: Would you buy this new item if you had to give up a comparable item in your home in order to acquire the new one? (That is the question.)
This question won’t work with large products like couches or cars, but it can be helpful with smaller purchases like clothing and other items. For example, would you buy those new shoes you just found online if you had to give up another pair of shoes (in perfectly good condition) at the same time? Thinking about this question can be a good way to evaluate how much you really want to make the purchase. Are you just buying these new shoes because they grabbed your attention and you feel good (in the moment!) about making the purchase, or are you really interested in owning them, even if that means you have to give up another pair of shoes that you also like? Asking yourself questions like this can help you assess the motivation behind your current desire to make a purchase.
A horse, a horse, my kingdom for a horse!
(Do you want the new item enough to trade in something that you already own? If not, this should tell you something. That is the answer.)
ACT IV
With discretionary spending for a product or service that you can “afford,” WHY do you want to make this purchase? (That is the question.)
Scene I: Some not-so-good answers:
(Lord, what fools these mortals be!)
- You want to keep up with what your friends, neighbors, or co-workers are buying/wearing/using.
- You want to impress someone or show off your wealth with the status of this brand.
- Everyone-who-knows-anything has this item, and you want to follow the trend.
- You think that owning and using this product will make you more like the person you saw in the ad. (Good luck with that.)
- The item was on sale, and you couldn’t resist the price.
- You’ve worked so hard lately that you feel as though you are entitled to buy this to treat yourself. (That may be true in some cases, but shop around and be reasonable.)
Scene II: Some good answers:
(This above all: to thine own self be true.)
- You think that owning this item will bring you lasting happiness, pleasure, or enjoyment.
- You have done some comparison-shopping, and this is the best value for this particular product.
- Even though the item may cost more than other products on the market, you think the quality will make up for that, because it will last longer.
- The expense is for an experience that you will carry with you for a long time.
- Buying this product or service will free up some of your time, which is more valuable than money.
- The product may cost more than other products on the market, but that’s because it is sustainably made and with real attention to proper working conditions.
ACT V
It seems as though there are shopping cues and triggers all around us, from highway billboards and ads on the back of cereal boxes to embedded brand placement in movies and native ads in media. You can resist this barrage by taking a step back and thinking about the purchase you are about to make. Ask yourself if you really need to trade your hard-earned, after-tax dollars for that product or service. (Hell hath no fury like a retirement plan scorned.) If you think before you buy, you might save yourself thousands of dollars year after year in impulse items that you probably didn’t need in the first place. Discretion may be the better part of valor, but discretionary spending—for the wrong reasons—is the worse part of value.
There is no invisible hand of fate that forces us to buy things we don’t need. If we overspend, the fault, dear consumer, is not in our stars, but in ourselves. What’s done is done. But it’s never too late to form good financial habits going forward. Think before you decide to make a purchase today, tomorrow, and tomorrow, and tomorrow. Shopping with intention will move your finances forward on the path to All’s Well That Ends Well.
