How can I get the best buy?
Financial responsibility requires that we consider the value of money, prepare a sensible budget, and make wise investments. When the time comes to make a purchase, don’t be swept away with clever advertisements that fuel a desire to get more and better things. Take time to thoughtfully consider your options and look for the best buy.
Relate money to the time required to earn it.
Learn the value of money by calculating the amount of time required to earn it. Be sure to account for all expenses associated with earning the income, such as transportation and taxes. Due to these expenses, your net gain will be less than your hourly wage. Ask yourself, “How long did I work for this amount of money? Is this item worth the investment of that amount of time?”
Figure savings by percentages, not cents.
Don’t dismiss the value of saving even a few cents on your purchases, especially on items that you buy regularly, such as groceries. When you save 20 cents on a can of soup that costs a dollar, you didn’t merely save 20 cents—you saved 20 percent. Imagine how much money you would save in one year if you reduced your food budget by 20 percent!
Carry as little cash as possible.
When people carry large amounts of cash for personal expenditures, they are more likely to spend money without disciplined budgeting, saving, and recordkeeping. If you deposit your paycheck in the bank, you can easily account for every dollar you earn.
Determine exactly what is needed before you shop for it.
In-store displays are designed to promote impulse buying, and if you shop without a list, you are likely to buy more than you need. Consider what you need beforehand. Contact stores directly, or do some online research to check on sale prices and stock levels as you hunt for the best buy.
Focus on the buy, not your bank balance.
If someone has $10,000 in savings and wants to buy an item for $100, he might easily assume he can afford it since he will have $9,900 left in his account after the purchase is made. This thought pattern is dangerous, however, because it leads to negligence in researching the value and cost of products and encourages others to take advantage of the slothful buyer. A wise buyer looks at his resulting bank balance only after deciding that he is getting the best buy.
Look at the price before you look at the product.
Advertising influences people to want something so strongly that they will rationalize their decision to pay an exorbitant price for it or live beyond their means in order to enjoy it. So, before becoming emotionally attached to an item, determine if you can afford it. If you realize that the price of an item is not within your reach, don’t even look at it.
Make sure you really know the full price.
Advertisements that offer payment plans of so much down and so much per month are actually saying, “If you knew the full price, you probably would not buy it—so we won’t tell you the full price.”
When you use payment plans to make expensive purchases, the final price you pay is usually much higher than the retail price of the product. For example, if you buy a car with a base price of $7,900, you also will incur the expense of taxes, dealer fees, license plates, title fees, insurance, extra equipment, maintenance packages, and interest. The actual total cost of the vehicle may be well over $10,000. If you were barely able to justify buying the car for $7,900, you would certainly face financial pressures when you paid the actual cost.
Compare costs with other things that could be purchased.
Consumer “tunnel vision” involves evaluating a product without any thought about what the same amount of money could (or should) buy in other areas. Comparing the cost of a purchase with the cost and potential benefit of other items provides a further basis for determining value and helps you decide if you should look for a better deal or an alternative.
Determine the unit price of quantity buying.
Sometimes buying economy-sized packages saves money, but sometimes it doesn’t. Find out the price per unit: divide the cost by the number of units in the package. For example, if a 32-ounce jar of mustard costs 96 cents, the unit price is 3 cents per ounce. If a 12-ounce jar is sold for 24 cents, the unit price is 2 cents per ounce. Thus, buying three 12-ounce jars rather than the 32-ounce jar amounts to a savings of more than 25%.
Along with cost, evaluate quality and convenience.
Consider the factors of time, stress, and quality as you decide where you’ll find the best buy. For example, it’s worthwhile to drive a few extra miles and pay a higher price to have a good auto technician look at your car. It’s also usually better for a busy parent to pick up groceries at the local store instead of driving to several shops around town, hunting for lower prices.
Total your purchases before checking out.
Even if you find the best buys, you’ll lose the savings you worked hard to find if the cashier overcharges you. If necessary, use a pocket calculator to tally the total cost of your purchases, and pay attention to the price that is rung up at the checkout counter.
Check products in a consumer guide.
A consumer guide or the publication titled Consumer Reports is an excellent tool that can help you determine the best buy. These kinds of publications evaluate the strengths and weaknesses of products and point out features and limitations that should be considered as you compare your choices. You can find these resources online or at your local library.
Check the consumer guide before you start shopping for a product. What you learn from this research will give you the basis for asking the right questions, letting salespeople know you are knowledgeable about what you are buying, and obtaining the best price.
Get counsel from owners and repairmen.
A key to wise buying is learning to gather information from others who have already gained knowledge about a product or service. You’ll discover that many of them have paid a high price for their knowledge, and usually they will share it without charge. Before buying an appliance, car, machine, or home, some of the best counsel you’ll hear will come from the present and former owners—or from repairmen. Those who have had experience with a product will usually be quite willing to tell you about it.
Check with your spouse before making a purchase.
Many marital disagreements are sparked by conflict related to financial issues. A wise couple will discuss their budget and come to an agreement about special purchases. A husband needs to hear the counsel and cautions of his wife, and a wife needs to wisely respond to the leadership of her husband.
If either partner has any hesitation or cautions about a venture, the couple should investigate the issue further. By working together and accepting their responsibilities within the marriage covenant, a husband and wife can help one another make wise financial decisions.
This material was adapted from the Men’s Manual, Volume II, pages 133–137.