Common cents

Be realistic about your needs

Understanding your needs is the first step. It is easy in some cases than others. For example when it comes to electronics, you would not buy a professional camera with all sorts of bells and whistles if all you need is a point and shoot machine. Or you would not go for top-of-theline computer with outstanding graphics and gaming capabilities if you only need it to use Word and surf the internet.

Use this same logic when it comes to other purchases. There is a level of acceptability that should be sufficient because it meets your needs. Be clear about this level to avoid paying for more than what you require.

In addition, be realistic about your future use of a product of service. For example, if you’re trying to get fit, do not build an entire fitness room in your basement if you haven’t even hit the gym in 10 years. Begin small and add what you need gradually.

In particular, take it easy when your purchases hinge on future income.

For example, if you’re looking for a new job, don’t step out and build a new professional wardrobe if you have a couple of pieces that could get you through the interviewing process.

There is almost nothing out there that doesn’t come in various purchasing options.

Make sure you research the options that are available for you and decide on what can be good for you — even if it is not the best in the market. For example, looking for a school for your children? You might want the best, but you might not afford it. See what fits your budget and shortlist options. Once you have a couple to choose from, do your due diligence to decide what really works for you. If none of the options seem satisfactory, you might need to review your budget and see if you can allocate more money. If not, it is time for compromises.

Money decisions are not easy, especially when they come to lifestyle. So be sure you don’t always go for the best, without taking your entire financial picture into consideration.

Gauge importance Understand options

The amount of time and decision making efforts depend on how important your purchase is. It also depends on how easy it will be for you to change or replace the service, product or purchase.

For example, if you’re leasing an apartment, you might not be able to get out of this lease for a year or so, and it will cost you money to do so and have an impact on your life throughout that time. If you’re buying a new television, a wrong decision may have much fewer consequences.

That is why you have to make sure you spend your time and effort where it matters. Of course, you can spend 45 minutes shopping comparing websites to buy a new pair of shoes or blouse — if you have the time. But do make sure you spend similar time and effort when the money decision you’re making will have a long-lasting impact on your financials and overall lifestyle.

■ The writer, a former Gulf News Business Features Editor, is a Seattle-based editor.