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‘Should I Buy This?’ A Financial Flowchart for Smart Spending

Written by
Samantha Rose
Samantha Rose is a personal finance writer covering financial literacy for OppU. Her work focuses on providing hands-on resources for high school and college-age students in addition to their parents and educators.
Read time: 3 min
Updated on July 27, 2023
Are you a smart spender? These 5 questions will make you one.

Ever feel like you have a hole in your pocket?

But money doesn’t magically disappear, even if it feels that way. Every purchase (large and small) adds up. And they don’t just happen. They’re the result of decisions — some smart, some not so smart.

You can change that.

To make good spending decisions, ask yourself the right questions before you open your wallet. This will help you avoid the type of spending that ruins your budget. It will also help you free up money for saving and other important goals.

Ready to get started?

Here are five questions to ask yourself before you spend, and a flowchart developed by personal finance pro Beth Tallman to guide you through the decision-making process.


5 Questions to Ask Yourself Before You Spend

No. 1: Is it a necessity?

Ask yourself if the purchase is a need or a want.

A need is an essential expense, such as food or housing. Needs can’t be cut from a budget, but savvy tactics like comparison shopping can reduce their cost.

A want, on the other hand, is a non-essential expense, such as eating out or going to a movie. They make our lives more enjoyable, but if your budget needs trimming, they’re a good place to cut.

Don’t worry: Not all wants should be eliminated. The trick is to take care of needs and other financial priorities first. After that, wants are fair game and you can spend guilt-free.

No. 2: Are my finances under control?

Consider whether your personal finance essentials are satisfied. Ask yourself:

  • Have I paid down debt on my credit card?
  • Have I contributed to my emergency fund?
  • Have I started saving?

There are three important reasons why debt and savings take precedence over new expenses.

  1. Debt accumulates interest and the longer you have it, the more expensive it is.
  2. A healthy emergency fund protects you against debt.
  3. Saving provides money for future needs.

Basically, these are the things you need to do to reach financial health. Take care of them before you spend on non-essential items.

No. 3: Can I reduce the cost?

Consider whether you can get a better deal. Ask yourself:

  • Can I borrow or rent it?
  • Have I comparison shopped?
  • Can I wait for a sale?

Savvy shopping strategies can reduce the cost of both needs and wants. When purchasing groceries, for example, avoid name brands and opt for their generic alternative. When buying a video game or an extra pair of shoes, wait for a sale.

No. 4: Will I go into debt?

Taking on debt should be reserved for needs. Once you determine that the expense is essential, ask yourself:

  • Can I afford this without using loans or a credit card?
  • Do I know how much interest I will pay if I use credit and is this amount affordable?

Not all debt is bad. In fact, some kinds of debt can improve your overall financial health. (Student loan debt, for instance, can help you finance an education that leads to a higher paying career.) But because of interest, debt will always cost you more than paying for something outright. Use it wisely.

In some cases, debt that doesn’t contribute to your financial health is unavoidable. (Emergency expenses such as medical care are one example.) In these situations, look for a financing option that fits into your budget.

No. 5: Have I slept on it?

Before you spend, wait. A cooling-off period will help you avoid impulse buys. It will also give you more time to ensure you make the right decision.

While you wait, answer the smart-spending questions one more time. Step away from the decision and clear your head. Come back to it in the morning.

A night’s sleep can do wonders. So sleep on it. When you make your decision, you can feel confident it’s the right one.

Article contributors
Beth Tallman

Beth Tallman is a financial educator, freelance writer, and consultant. She writes on personal finance and financial education, conducts student workshops, and develops educational content. Ms. Tallman is the treasurer of Ohio Jump$tart Coalition and is a regular contributor to NextGen Personal Finance.

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