Toward a more Sensible Buying Behavior

Buying something is a common activity that people engage in almost every day. In fact, there are small items that we buy too frequently that buying this particular item has become a habit for us. Because of this, doing it has become an automatic response that we don't think much about.

As we become older, we also develop a certain way of buying things, including making a decision on whether to buy something or not as well as choosing from among the alternatives which one to buy.

As we perform this buying activity, something goes on in our minds that sometimes we are not even aware of. Such is the mental process that can also become a habit if done repeatedly over a number of years. And if this buying habit has been based on false assumptions and erroneous information, we could suffer a significant financial loss that could have been avoided.

Here are some ideas that can start you off in examining your own buying pattern and making corrective actions that can save you a lot of money in the long run.

0. Is the item something that you need or something that you want? A need is something that can enhance your productivity as you perform tasks that promote the attainment of your goals. A want is something that arises out of the need to please oneself or the others and can ultimately be traced to the urgings of vanity or a feeling of insecurity. Buying something that you want should be done sparingly and should only be made for the purpose of rewarding oneself for a job well-done.

1. Treat big ticket purchase as an investment. There should always be a sensible reason for acquiring an expensive resource. The purchase should either save you time and money or provide opportunity to increase your income. Cars and computers are examples of big ticket items that should be treated as investments. Purchasing items that require a relatively large amount of money should be based on a solid assessment of its desirability. Buying expensive items without knowing how much it impacts your financial status is like throwing money in the wind. There must be a way by which the money invested could be recouped.

2. Don't include advertising information in choosing which product or service to buy. It would be better to have your own set of criteria for deciding on which competing item to buy. Ask from the seller for the information that you need for assessing how the product or service fare in terms of the selection criteria that you have set up for deciding on which product or service to buy.

Advertising information abound everywhere. They have been crafted by sophisticated writers to highlight their product's superiority and brush aside their product's imperfections. Advertising information should never come into play in choosing which competing product or service to choose. Don't ever fall into false savings sales trap. In fact, don't believe any sales-oriented information that the salesperson gives. A classic example of a sales pitch is that the price of the item would be increased next month. Don't ever fall for this gimmick.

3. A sale is an indication that people are not buying the product or service. Sales gimmicks are invented to hoodwink prospective buyers into parting with their money in exchange for the promised benefits. Beware of sophisticated sales gimmicks. You will most likely find yourself at the losing end if you let yourself be taken in by unscrupulous sales persons. Know what functionality you need in what you want to do and choose a product or service that gives you the best service for the least cost.

A practice among sellers that is happening lately is degrading the product so the buyer can afford it. The buyer soon learns that the equipment is under-powered to perform a certain task that he needs to do. The product is designed based on standard specifications to make it perform a range of tasks. Messing with the specifications often results in an under-performing equipment that is not suitable for executing certain tasks.

4. Know the total cost of ownership of a product or service. There are purchases that will force you to commit a certain amount of money for the use of the product or service that you buy. These amounts should be included in finding out the financial feasibility of a proposed purchase. Buying a car, for example, implies that you have to pay for the fuel and maintenance costs of the equipment. Failure to take this into consideration would give you a lopsided view of the purchase proposal.

5. Know how to make basic financial calculations. In mortgage transactions, there are different ways on which interest is applied in computing the monthly payments. Understand the different ways on which interest on the debt is computed and go for the computation that minimizes the most the interest that you have to pay. Know that the value of a product decreases over time. Understand that the value of money changes over time. There are ways by which future cost or income can be discounted so that you will be able to choose which option is preferable based on the current monetary values.

A buying decision entails answering two basic questions: Should you or should you not buy this item and if you should, which one among the choices available should you bet your money on. There should always be a sensible reason for purchasing a product or service. The choice of which item to buy should be in accordance with how closely the item matches your selection criteria. The decision should be made based on the best available information. Disregard irrelevant sales information to avoid falling victim to a sales gimmick. Acquire financial literacy through reading books or browsing the Internet.

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