Ask: “What Else Can I Spend This Money On?” Before Major Purchases
There are many variables involved in making important financial decisions. While the translation of the purchase price into hours worked is a great indicator, try asking what else you could buy with that money to get some idea.
As the personal finance blog Life and My Finances notes, every dollar spent is a wasted opportunity to spend that money elsewhere. It’s okay for some things, but it’s easy to impulsively spend money and then wish you had it for something else. By quantifying this “something else”, you can estimate the opportunity cost of your purchases:
In practice, if I spend $ 100 on a fancy dinner, that’s $ 100 to buy 10 pairs of socks, one killer WordPress theme, or 2 mid-range seats for the Charlotte Hornets basketball game. Before your next purchase, think of other wonderful things you can buy elsewhere.
Of course, there is always something to buy. However, with a concrete example, you can weigh whether the choice before you is the best, or if you should defer to something better.
Ask Yourself These 3 Questions Before Your Next Purchase | Life and my finances via Rockstar Finance