There's a lot of ways to prioritize your purchases. Sometimes, when emergencies happen, your decisions are made for you. Need to get to work? Well, then you had better pay to fix your broken car or else you won't be able to get to work. Most of the time, however, you don't get to choose quite so easily.
So how do you choose what to buy next? Shortly after my wife and I moved into our new home, we knew that we would need to prioritize some purchases. We needed to get a washer and dryer immediately, and we also knew that we wanted to replace our fridge when we could.
The washer and dryer were first because needed to be able to wash our clothes – so the necessity of the item outweighed other potential costs. The fridge, on the other hand, was not a necessity, but it greatly improved our kitchen's layout and workflow, as well as added freezer space that we wanted, so it was more based on the improvement of life that it brought us.
Two similar purchases, but based on different reasons. Here's a few other ways that we have recently allocated our funds.
Long Term Gains
One of our primary goals when we look at spending our money is the long term gains that we can get from the purchase. One of the main things that we looked at while purchasing appliances was the usage costs that are associated with them.
For example, every fridge that you look at has a different energy star rating. Buying one with a lower annual energy usage means that you can save money throughout the year buying that particular model over another.
Likewise, we prioritize paying off debt as that is a great way to get the most from our income. Keeping long term goals in mind is a great way to figure out how to spend your weekly paycheck. It may seem like a good idea to order pizza and go to the theatre, but look at how that money could benefit you more over 6 or 12 months instead to see if there would be a better usage for it.
Another good example of this would be during home renovations. For most people, they have a set budget for their renovations that they don't want to go over, and they also have a picture in their minds about what the finished product will look like. So when the budget gets tight, the first things to go would be the things like proper insulation or paying for a permit, but those are two things that can cost you a LOT of money in the long term if they're not done properly the first time.
If you have in mind a couple of ideas for things that you want to purchase for your home, for example, but can't decide which one to get first, think about which one will get the most use. Spending more money on things that you use the most often is a great way to maximize your hard earned dollars.
Most people have a TV in their home, and if you were to go to a store that sells TV, they would probably suggest the same TV for you if you watch TV once a week, or for 6 hours each day. That doesn't make sense. If you watch a lot of TV in your home, and if you use it as a theatre replacement or as your primary source of entertainment, then it makes sense to get a great TV!
If you only watch the news once a week, then it doesn't really matter if your TV is the ideal size for your viewing distance. Just get one that works (even if its been used) and you are good to go.
Likewise, if you are looking to replace something that is currently a source of frustration, like a dripping faucet or an ugly light fixture, consider which you are annoyed by the most often and allocate your funds appropriately.
Quality of Life
So much of advertising is trying to get us to buy into a temporary lifestyle. Get some trendy jeans at the corporate store, buy some pizza because it'll make your family happy, and then watch this movie because it'll make you laugh.
A lot of those things do improve the quality of your life – but only temporarily. Soon enough you're stuck with ugly jeans, a beer belly, and can't remember the movie you saw. So when you're making purchases, think about how they may improve the quality of your life – for more than a day or two.
Perhaps you're looking to buy a home, and one of them is a lot more expensive than another. if the more expensive one is closer to a school, or your workplace, or is in a safe area of town, then perhaps it would be a better purchase than the one that would add 20 minutes to your morning commute. We recently made a large purchase for a new mattress because we knew that it would increase our quality of life.
How do you make purchasing decisions?