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To Spend Or…

Gary Foreman Gary Foreman is a former Certified Financial Planner (CFP) who currently writes about family finances and edits The Dollar Stretcher. You'll find hundreds of FREE articles to stretch your day and your budget!


Can you help me develop a way to control spending by every member of a family? I want to try to come up with a set of spending criteria. Something that’s fact based and removes emotional elements. What would you include in the criteria and do you think that the idea will work for family members who tend to buy on the spur of the moment?


Sherri has put her finger on the pulse of our finances. And, she’s asked two questions that should interest all of us. How do you make spending decisions? And can you reduce them to a logical, fact basis?

Let’s begin by looking at how we make decisions. There’s the way that we should make decisions and the way that the marketers of the world would like us to make them.

You don’t need to be a fan of TV’s Mad Men to know that there’s a whole horde of professionals trying to convince you that you need to buy their product or service. And, since it’s a multibillion dollar industry that’s been around for decades, you’d have to believe that they have some influence on our decisions.

Their model is a simple one. Convince you that you want their product and that you can afford it (even if that means making payments or charging it). Sadly for many of us, we just go along with them and spend ourselves into a corner.

A more correct model would be like Sherri suggests. You would need to answer ‘yes’ to a number of questions before you made a purchase. A ‘no’ along the way would prevent the buy.

You can create your own series of steps, but here’s a list to help you get started:

  • Do I need the item? Not want it, but need it. Sometimes this won’t be black and white. I need to eat dinner. But do I need the premade ‘salad in a bag’ or can I make it myself.
  • Can something else fill the same need? The tea maker might be handy, but I don’t need something special to make tea.
  • Could I rent or borrow it? Maybe you don’t need to buy a dress for that fancy affair if a sister has one that you could borrow.
  • Can I afford it? Not can I afford the payments. Or do I have enough room under my credit limit. Rather is there room in my budget for this purchase.
  • Are there any lower cost alternatives? Could I buy something else that would do the job for less? Could I get a better deal on the same product from another store or company?
  • Will I regret this purchase tomorrow or a year from now?

You may want to add some steps based on what you’re considering or your particular family or financial circumstances. Feel free. After all, the list is only good if it helps you make better decisions.

The second part of Sherri’s strategy is a little more difficult. Can any of us completely separate our emotions from buying decisions? I’m afraid that the answer is probably ‘no’.

We can minimize the emotional element of spending by following a list of questions that will help us recognize the facts surrounding a purchase. But our emotions and life experiences will color even how we answer those questions.

Let me relate a story I heard years ago. It was about an orphanage that had been liberated at the end of WW2. When the Allies first arrived the children were starving and just hanging on. One of the first things they did was to put the children on a nourishing diet to restore their health. But after a few months they noticed that the children weren’t gaining weight as expected. In fact, progress seemed very slow.

Then one of the caretakers had an idea. Each night at the evening meal they gave each child a roll to take back to their beds. None of the children ate it, but rather clutched it through the night. Soon the children began to gain weight and health.

Psychologists recognized that the roll allowed the children to sleep knowing that they would have be able to eat the next day. That was something that they hadn’t known before. The added security was enough to ease their minds and help them back to health.

The same thing is true for you and I. Events in our past can color our emotions and our decisions. You might think I don’t need a new pair of shoes. But, if I spent my childhood patching my shoes for school, an extra pair now seems like a good decision. My emotions will override logic and make the choice.

Having a set pattern for making purchasing decisions is a good idea. We’d all benefit from using one.

But, if Sherri finds that her family is making emotional buys, trying to force logical decisions might not work. She may need to encourage family members to a little self-analysis to see why they make specific purchases.

This entry was posted in Budgets, Financial Planning. Bookmark the permalink. Read more articles by Gary Foreman. (Also see articles by all authors and articles in all categories.)

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