Decisions, Decisions, Decisions

February 8, 2012

By Brian Page, Ohio’s recipient of the 2011 Milken National Educator Award.

"Buy Now"; "Everything Must Go"; "Same as Cash"; "0% Interest for 60 months"; "6 Easy Installments"; “Diamonds are Forever”; "But Susie has a pair!" Sound familiar? If it is a holiday or tax rebate season, you are probably hearing this quite a bit.

A multitude of obstacles stand in the way of responsible spending choices. Consumers are faced with an innate desire to want more than they can afford because they want it now. Companies spend hundreds of billions of dollars researching and implementing sales techniques that get their products and services into consumers’ hands. If that isn’t enough, scientists have found that decision fatigue sets in as the day progresses and choices are presented.

Here are three suggestions to help guide your spending choices:

Don’t let anyone else tell you what you can afford and why you like it

Spend your money consistent with your own values and goals. In other words, do not try to ‘Keep up with the Jones’”. Advertisers, salespeople, and even society have a knack for making you feel like you have to have something, and it is okay to use credit to pay for it later. Sales and product improvements are the luxuries of a free market that will always be there. You do not have to take advantage of them every time they present themselves. Make choices that are line with your own spending priorities, goals, and budget.

Don’t let anyone else tell you when you have to buy it

From an article on closing techniques for sales professionals, “If the prospective buyer seems to be procrastinating or promises to return to purchase, emphasize that now is the best time to buy. After all, most prospective buyers who walk away usually never come back. You can do this by invoking seasonal effects, reminding them of short-term reasons why the product can help, or showing statistical data and facts that support why the best time to buy is now.”

You decide when you want to make a major spending decision by walking away, sleeping on the choice, and making the choice in private and in your own time.

Don’t let anyone else tell you what your opportunity costs are

Your spending choices should always include not spending money at all. This is not something you will hear very often from a trained salesperson. They will typically compare their product or service to their competitors. The opportunity cost they are not discussing with you is the piece of mind you earn by saving or investing the money.

Brian Page (@FinEdChat & Finedchat.blogspot.com) is Ohio’s recipient of the 2011 Milken National Educator Award. He co-created the national financial education tabletop game of the year, Awesome Island Game and teaches Personal Finance with Reading Community City Schools.

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    Impulse buys are an easy way to blow your holiday budget. Make a plan & stick to it! http://ow.ly/CVJZf

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