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This is Part 1 on the message on Money. In
the introduction we looked at different types of individuals and
their responses to financing. Now let’s look at purchasing
products for our lives. Our first step is analysis. We should be
asking ourselves five questions before we go and spend money on
different products.
1. Do
I need it? Rank the purchase as
a need or want. This is one of the hardest questions you can ask
yourself. The reason it is difficult because everyone has a
different comfort level.
For example, I think I need a van. I
don’t own a business and I do not have to travel and bring items
with me. I only have two children and neither of my children is
disabled. All these are reasons I do not need a van. I want a
van. Of course, if I was a salesperson and had to travel or my
children had a physical disability and I needed the van for
them. This item would be a need. This leads us to the next
question.
2. Can I afford it?
We must have a budget. We should be able to afford the item we
need. If was cannot afford it, we must learn to live without it
or find other alternatives.
3. Does it bring a long term benefit?
After you had determined it is a need and you can afford the
item, it should bring a long term benefit.
For example, you need a shampooer but
you only do this once a year or every few years. It is a need
but it would be more economical to rent a shampooer for this
occasional clean up. However, if you own rental property and you
use it more often you should invest in a shampooer which has
long term benefit.
Every purchase needs to produce a long
term benefit. The long term benefit of the shampooer that it is
used frequently and saves money.
4. Does it save time, money or both?
The best way to determine if an
item will save you time you must look at your daily
activities. If you are attempting to do this activity everyday
without this product then this purchase holds merit.
For example,
you purchase a cup of coffee everyday
at your local gas station or donut shop. This saves you
time in the morning when you need to get ready for work
but it costs too much money. In reality the time you invest in
getting a cup of coffee would be better spent at home because it
takes less time to make coffee than to buy it. So although you
feel it saves you time it cost too much money.
A coffee maker saves time and money. It
saves time because the place where you buy coffee may be busy
and you are late for work because it took too long to get your
coffee. It saves money because it cost much less to make coffee
at home. However, if you drink coffee once a week or once a
month, it would not save you money. You might consider buying
instant coffee or eliminating this activity since you don’t seem
to want it very often.
However if you would like to start using a
product in order to save money and you don’t currently do
this activity, I venture to say that it will wind up being
thrown in the closet. It will be used very infrequently like
many other items you have purchased to make your life better
because you don’t have time.
For example, you purchase a bread
maker, you know this is an investment of time but you think this
is a good way to spend your time. It does not save you any time.
However, you think it saves you money. You get
better quality bread with less money.
You forgot to figure in the
amount of bread that you eat in a week and the cost of the
prepackaged ingredients. So, not only are you not saving money
you are not saving time because you added this to your limit
time schedule in order to save money. By the way, this item is
frequently found at garage sales.
You must consider if the product saves
time or money or both. If your time is valuable, then buying
a product in order to save time is important. However, if you do
not use the product effectively then you have saved nothing
especially time if that is the reason you purchased the product.
Also you must be able to save money if you want to be very
proficient at creating a realistic and affordable budget.
5. Should I buy good quality or cheap price?
If the product is going to be used
regularly, you must obtain a product that demonstrates good
quality for long term benefit. This comes with the condition
that it will be treated with great care. If you have no
intention of maintaining the product, always chose the cheapest
possible product.
For example, I buy cheap
sunglass. I constantly leave them somewhere or lose them. So, I
buy cheap. This same rule applies to my earrings for the same
reason. However, other products that I use regularly I buy top
quality because I maintain the product and therefore save money
for long term benefit.
For example,
when I am buying a washing machine I look for longevity and
good quality. I look for size based on the number of
people in my household. I do not buy all the bells and whistles
because I don’t do laundry for a living. I do it so my clothes
are clean. The maintenance involved with the washing machine it
making sure that:
1. I install the washing machine correctly.
2. I do not overfill the washing machine.
3. I make sure that the clothes are balanced when loading etc.
If you are asking what the long term
benefit is, then ask yourself how much money you would spend in
a laundry mat. That is the comparison for long term benefit.
If you are reading this and saying, “You
must be kidding I cannot possibly think about this stuff when I
want to buy something.” Then let me ask you, “Do you think that
much about money when you are unable to pay the bill or having
difficulty making ends meet?” How much time do you devote to
dealing with the consequences of spending too much money or not
having enough money?
There are verses in Proverbs that talk
about this. Proverbs
21:5 The plans of the diligent lead surely to plenty, but
those of everyone who is hasty, surely to poverty.
It says plans of the diligent. We all need to plan and be
diligent. This eliminates impulse, frivolous, and excessive
buying. It requires a realistic and practical plan. This always
will require time. Time that will bring with it plenty. The only
question we need to ask ourselves is “Do I want plenty?” If you
want plenty, take the time to make plans and be diligent.
The other verse in is
Proverbs 13:11
Dishonest money dwindles away, but he
who gathers money little by little makes it grow.
So long…quick fix, it is a slow little by little growth. We all
know that dishonest money dwindles away but so does honest money
if we use it incorrectly. We need to gather money little by
little. We must make a long term plan for long term rewards.
The time spent in learning how to use your
money effectively would be a greater investment with long term
benefit. However, if you enjoy wallowing in your mire of
discontent, please continue to do what you do best which is
spending money without regard to the consequences and enjoy the
rewards of your investment.
We have made an analysis of a product. We
need the product, can afford the product, it will bring long
term benefit, it will save time and money, and it needs to be of
good quality. So let’s proceed to the next step which is
action. Our actions require forethought and planning. |
