What You Can Buy Vs What You Can Afford
Here do We find two friends strolling along in the mall on a lazy Saturday afternoon. Passing by their favorite clothing store they quickly duck in to check if the new fall line has finally come out. Grinning with glee they stare rapt at the new clothing on display. What a day of days!
One of them quickly picks up a shirt and when the other asks “can You afford that?” they receive a smug smile in reply.
“Of course it’s only $200.”
“Wait a sec, how much do You have in Your account again??” asks the friend bewildered. Now comes a large show of teeth from the pursuer of a purchase.
“$205!” the soon to be purchaser exclaims.
Even though this story is attempting to illustrate my point in the extreme it is still true that individuals can confuse what they can buy with their bank balance to what they can afford with it.
For example it is true that You could buy a Ferrari if You had $250,000 in Your bank account and were making $100,000 a year but that doesn’t mean You can afford it.
Running costs, servicing, the cost to Your savings and investment plans have to be taken in to consideration.
When these are taken in to consideration then it can be seen that buying something and affording to buy it are two very different matters indeed.
Though I have covered the topic of spending wisely in other articles I’d like to re-express it here.
When going out to buy things consider how much they cost in a broader sense. If You want to have a given amount of money in the next 5 years is the purchase You are about to make going to help that goal or hurt it?
Are You living beyond Your means by buying things which then eat into Your savings every month?
Are You only paying the minimum on Your credit cards?
Have You taken out loans to buy things and not to invest the money so that You have a higher return which will pay back the loan and leave You with a profit?
If You are engaging in any of these actions then You are not living a life You can afford and reconsidering Your fiscal habits is in order.
Remember, all of those things You want are going to be in the stores in 6 months or even 6 years and if they aren’t by the time You get there something better will be waiting for You.
Whenever You are getting discouraged by the fact that one of Your friends ‘already has’ a ‘new car’ or ‘new watch’ or ‘new apartment’ You have to understand that maybe they have had better fiscal habits than You and that is why they have those things.
I’ve expressed it before but I will express it again. It is better to learn to do things the right way once no matter how long it takes or how hard it is than to do the wrong things again and again until the cows come home.
For more information on fiscal habits please feel Free to read My Article ‘Stop Saving!’
Thank You for Your Time & Have a Beautiful Day.