How to Make Good Purchasing Decisions

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When you don’t track your money, it’s easy to spend what you don’t have. This lifestyle can quickly lead to financial worries, such as a lack of funds during emergencies, and an inability to pay your bills.

How to Make Good Purchasing Decisions

However, you can help yourself become financially savvy by learning how to make good purchasing decisions.

 In practical terms, 

Consider Wants Versus Needs

Good purchasing decisions stem from buying the things you need before the things you want 

— but what’s the difference?

Needs include necessities such as food, water, clothing, and shelter. It’s essential to cover costs like rent or mortgage payments, as well as grocery bills. Make a list of what you need to pay each month to determine your financial obligations and don’t forget to set aside money for savings or an emergency fund. Once you meet these needs and savings goals, you can spend money on the things you want.

African American Financial Literacy
A close up of a student using a calculator and studying in a public library.

Ask Yourself Some Questions

If you find yourself tempted to make an impulse purchase when you’re out shopping, it’s essential to ask yourself some pertinent questions.

  • What will you do with the item?
  • How often will you use the item?
  • Is now the best time to buy the item?
  • Will you still want or need this item in a year from now?

These questions will help you determine if the item you’re considering is a good purchasing decision or something you should put back on the shelf.

Consider Your Current Savings

Before you consider taking out a loan for a purchase, consider your current savings. Is this purchase something you’ve been planning and saving for? If so, it makes sense to use the money you’ve set aside for this purchase, as long as you’re staying within the original budget you set for yourself.

Spend as Little as Possible

You’ve decided to make the purchase. Before you step up to the register, however, consider if you’re in the right store. Prices on items can vary drastically from place to place, and shopping around can save you big bucks.

Simple Ways to Control Your Holiday Spending

To help you uncover some shopping savings and thrive in an uncertain economy this year, 11 ways to avoid overspending this holiday season

  1. Know who’s on your shopping list

Do you know who’s on your shopping list? If not, you better check it — and then check it again. You may be feeling generous, but you don’t have to purchase gifts for everyone. 

When you’re creating your shopping list, mark the essential people you need to buy gifts for and remove everyone else. Every purchase adds up, so you don’t want to buy things just because you feel like you have to. You can always send a thoughtful card instead.

  1. Take a look at your finances

Before heading out to do your holiday shopping, be sure you know where your finances lie. Your money situation can change anytime in this economy. Instead, consider your debt and come up with a total number you can’t or don’t want to cross as you make your holiday purchases.

If you stay under that number, you’ll have saved some extra money this year. 

  1. Set a budget

Creating a budget is a key step in learning how to manage your money. As you look at your finances, it’s easier to set a budget if you break it down into smaller goals. For instance, you may want to spend less than $5000 on gifts this holiday season, but how is that going to be spread out between family and friends? 

Looking at your finances will help you understand if you’re being realistic with your holiday budget. If it doesn’t seem realistic because of debt or other factors, you’ll simply need to chop it down a bit. This can be difficult because you want everyone to have nice gifts, but when it comes to your finances, you don’t want to overextend yourself.

  1. Use the right credit cards

If you want to get the biggest bang for your buck on holiday shopping, there’s no ignoring the benefit of using credit cards. Many credit cards offer valuable rewards on purchases, including any purchases you make while shopping. You can typically earn rewards in the form of points, miles, or cash back. And then it’s easy to redeem them for cash, travel, gift cards, or more.

Cashback cards are especially useful for holiday shopping. Because you can earn cash back on every purchase, it’s like you’re getting an automatic discount on all your spending. 

  1. Shop around for upcoming sales and promotions

Preparing for your holiday gift-buying trips can easily save you money on your purchases. Check out what deals are happening and be sure to compare prices between different stores. It doesn’t have to take a long time to know about upcoming sales and promotions, and it can be well worth the effort if you end up saving a lot of money.

  1. Use coupons

Couponing may seem a bit outdated, but if you’re wondering how to save money this holiday season, this tried-and-true approach may help. You can still find coupons in flyers, and it takes only a few seconds to cut them out before you go shopping. Or you can use the alternative method of using online coupons at your favorite stores.


  1. Get crafty

For creative individuals, a homemade gift can add that extra touch to a special time of year. Not everyone has the talents to pull off crafty and personalized gifts, but if you do, consider putting your skills to good use. It’s a great way to use items you already have around the house, which saves you money and still shows someone you’re thinking about them.

  1. Shop at the right times

The end of the year is filled with stores doing different deals and promotions, including Black Friday and Cyber Monday. If you plan and prepare ahead of time, you can score big deals during the right times and save yourself loads of money. Most big stores will put out their Black Friday and Cyber Monday deals in flyers well before those dates, so you can take a look and see if anything lines up with your gift ideas.

  1. Avoid impulse buys

Although it can be worth your time to prepare for special sale days, keep in mind that you don’t actually have to buy anything when those sales happen. If there’s nothing on sale that actually fits what you’re looking for, don’t feel pressured to buy an item just because it’s a good deal.

  1. Track your spending

Once you’ve considered your finances and set up a budget, make sure you’re tracking your spending. If you’re using credit cards, it’s easy to log into your online account and check your credit card transactions. Otherwise, you can write your expenses down, keep your receipts, and/or keep notes on your smartphone or another device. If you don’t track your spending, it’s harder to know whether you’re staying under budget.

  1. Consider next year’s bills

The general excitement and happiness of the holidays can lead to overspending on gifts and other things. To help prevent this, consider your bills for next year and make sure what you’re spending right now isn’t going to negatively affect necessary bills in the future. You may already have certain expenses planned for the coming months, like needed repairs or purchases that you can’t hold off.

It’s not as exciting to think about bills instead of buying fun gifts, but it’ll help you stay financially secure and keep your stress levels down when it comes time to pay those bills.

The bottom line

The holidays are meant to be enjoyed, and they should be. That doesn’t mean you need to spend all your money to appreciate the season and your time with loved ones.


Creating a budget

If I have take-home pay of, 80,000 a month, how can I pay for housing, food, insurance, loans and have fun without running out of money? (And we dont even talk about those having kids). That’s a lot to cover with a limited amount.

The answer is to make a budget.

What is a budget? A budget is a plan for every dollar you have. It’s not magic, but it represents more financial freedom and a life with much less stress. Here’s how to set up and then manage your budget.

If you’re looking to create a personal budget, start with these 7 steps

Step 1: Calculate your net income

The foundation of an effective budget is your net income. Calculate your monthly income

Step 2: Track your spending

Once you know how much money you have coming in, the next step is to figure out where it’s going. Tracking and categorizing your expenses can help you determine what you are spending the most money on and where it might be easiest to save.

Begin by listing your fixed expenses. These are regular monthly bills such as rent or mortgage, utilities and car payments. Next list your variable expenses—those that may change from month to month, such as groceries, gas and entertainment. This is an area where you might find opportunities to cut back. 

Record your daily spending with anything that’s handy—a pen and paper, an app or your smartphone, or budgeting spreadsheets or templates found online.

Step 3: Set realistic goals

make a list of your short- and long-term financial goals. Short-term goals should take around one to three years to achieve and might include things like setting up an emergency fund or paying down credit card debt. Long-term goals, such as saving for retirement or your child’s education, may take decades to reach. Remember, your goals don’t have to be set in stone, but identifying them can help motivate you to stick to your budget. For example, it may be easier to cut spending if you know you’re saving for a vacation.

Step 4: Make a plan

This is where everything comes together: What you’re actually spending vs. what you want to spend. You might choose to break down your expenses even further, between things you need to have and things you want to have. For instance, if you drive to work every day, gasoline counts as a need. A monthly music subscription, however, may count as a want. This difference becomes important when you’re looking for ways to redirect money to your financial goals.

Step 5: Adjust your spending to stay on budget

Now that you’ve documented your income and spending, you can make any necessary adjustments so that you don’t overspend and have money to put toward your goals. Look toward your “wants” as the first area for cuts. Can you skip movie night in favor of a movie at home? If you’ve already adjusted your spending on wants, take a closer look at your spending on monthly payments. On close inspection a “need” may just be a “hard to part with.”

If the numbers still aren’t adding up, look at adjusting your fixed expenses. Could you, for instance, save more by shopping around for a better price? Such decisions come with big trade-offs, so make sure you carefully weigh your options.

Remember, even small savings can add up to a lot of money. You might be surprised at how much extra money you accumulate by making one minor adjustment at a time.

Step 6: Review your budget regularly

Once your budget is set, it’s important to review it and your spending on a regular basis to be sure you are staying on track. Few elements of your budget are set in stone: You may get a raise, your expenses may change or you may reach a goal and want to plan for a new one. Whatever the reason, get into the habit of regularly checking in with your budget following the steps above.

Step 7 Automate your savings

Automate as much as possible so the money you’ve allocated for a specific purpose gets there with minimal effort on your part. An accountability partner or online support group can help, so that you’re held accountable for choices that blow the budget.

Practice budget management: Your income, expenses and priorities will change over time, so actively manage your budget by revisiting it regularly, perhaps once a quarter.


How to Stick to Your Budget Plan


Sticking to a budget can be a challenge, especially if this is your first-time keeping track of every purchase you make. But rather than feeling overwhelmed or defeated from the get-go, just remember that the purpose of your budget is to help you reach your long-term financial goals. With a little practice and these tips below, you will become a budget master in no time:

Think Deeply About Big Purchases – Feel like splurging on a non-essential item that doesn’t fit into your budget? Rather than making a snap decision and falling behind in your monthly financial plan, take some time to think about it. Is it a necessity in your daily life? Does the value outweigh the financial stress it could cause?

Avoid Going Into Credit Card Debt – No matter how big your credit card limit is, it’s important to avoid going into debt whenever you can. If you make a big purchase on your credit card but you don’t have enough money to pay it off at the end of the month, you will spend more than your budget allotted on interest alone. Set up savings plans for the big-ticket items you want, instead.

Plan Out Your Weekly Meals – If you’ve gone grocery shopping on an empty stomach, you know how expensive it can end up being. Rather than spending more money than you have to at the grocery store or on takeout food, try to plan out your weekly meals. Find recipes you like, make a grocery list, and shop once a week to keep your spending in check. 

Be sure to check out the Saturdays LIVE interview on our Instagram Page with Financial Expert, Floyd Thompson

Click HERE to watch

Haute People was launched in September 2011 as a Fashion Blog and has grown into a Lifestyle Blog. The Term “Haute” can be defined as “Fashionably Elegant” or of High Quality. This blog looks at topics from Beauty, Fashion, Entertainment, Hair Trends, Pop Culture as well as exciting new features every month. A favorite among our readers is “Behind The Seams” where influential people from the Creative Industries are featured. . Haute People are Smart, Bold, Creative and Individualistic. If you have an innate passion for Lifestyle, Fashion and all things current, you are HAUTE.

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