Make A List: Best and Worst Purchases of 2015
In the spirit of year-end lists, here’s one list you can make that will help you get a handle on your spending…
Any casual internet user knows that December brings with it a host of ‘Best/Worst of the Year’ lists wherein websites recount the year’s best TV shows, biggest news stories, hottest celebrities and most popular Vines. It’s fun to look back and remember the micro-fads and flash-in-the-pan trends, the viral videos and the inevitable parodies that seemingly disappear overnight. Remember when the issue that truly divided this nation was the color of a dress?
The end of the year can also be a great time for reflecting on your financial situation. How have your actions over the past year affected your debts, your savings and your investments? Are you noticeably richer than you were a year ago? Are you noticeably poorer? Have your Pokémon cards from middle school appreciated at all in value or did your mom accidentally throw them out?
Here’s one list that can help you sort through your spending from the year 2015…
Best and Worst Purchases
Sometimes it seems like a great idea to buy that brand new smoothie maker; after all, you are planning on eating better and getting into shape. But fast forward six months and that smoothie maker sits in the back of the pantry, its box unopened. On the other hand, that panini press you bought? You use that thing every day.
When someone talks about being more responsible with their spending, they usually mean that they should spend less money than they are spending now. And spending less money is good. It allows you to pay down your debt faster, build up an emergency fund and invest money for the future. But spending less money is a goal and in order to achieve that goal you are going to need a strategy.
Take some time this holiday season to go walk through your house or sift through your online statements and determine what big purchases you made this past year. Include both stuff you bought, like a new memory-foam mattress, and stuff you did, like an expensive massage.
List all of these purchases in a spreadsheet. (Spreadsheets are good to use for stuff like this because they are easy to sort and re-order.) First, divide the list into ‘needs’ and ‘desires.’ Getting your brakes fixed is a need. Getting your highlights fixed is a desire. Once you have them sorted, go ahead and throw out the ‘needs’ section. You’re here to focus solely on those purchases listed as ‘desires.’ Add a section to each entry titled “How often do I use this” if it was an item or “How much did I enjoy this?” if it was an experience.
It’s this section of the list that is key. Once you’ve filled it out, you are then going to rank every large purchase that you made in 2015 from best to worst. If it helps, you can even grade them on a 100-point scale like Pitchfork does. Just don’t spend too much time agonizing over whether the new overcoat you bought was a 7.1 or a 7.2. No one knows the difference. (You hear that, Pitchfork? No one.)
What’s the Real Cost?
An important thing to keep in mind when making this list is the idea of opportunity cost. Whenever you spend $1 on something, it becomes $1 that you can no longer spend on something else. You have cost yourself the opportunity to spend that money elsewhere. For instance, buying yourself a new pair of jogging shoes means that you cannot spend that same money on a Downton Abbey Blu-Ray box set.
It’s also important that you be honest. You could even go so far as to ask your friends and family for input. You might still be deluding yourself about that smoothie maker but they sure won’t be.
Once you have finished your list, start looking for trends. (Again, a spreadsheet can be really helpful here.) When you spend money, what purchases seem worth it? Maybe you’re the kind of person who likes watching movies and so the cost of your home theatre was money well-spent. Maybe you’re a foodie who gets the most from their spending when it’s on fresh ingredients and new dining experiences. Some people like to spend their money on traveling and keep their homes very plain. Other people are homebodies and spend their money on nice furniture for sitting and reading on a rainy day.
It doesn’t matter precisely what gives you the most bang for your buck. What does matter is that now you know. This list will help you organize your financial priorities for 2016. Being more responsible isn’t just about spending less, it’s about spending better. And a great place to start is by cutting out the spending on stuff that you neither want nor need.
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