Don’t Ask ‘Can I Afford It?’ Instead Ask ‘Should I Afford It?’

Don’t Ask ‘Can I Afford It?’ Instead Ask ‘Should I Afford It?’

Just because you have the money for something in your account — or the space in your budget to make the monthly payments — doesn’t necessarily mean that it’s a good idea to buy it.

Photo by Thirteen of Clubs.

The difference between “can” and “should”, aside from preventing possible dinosaur-related disasters, is key to setting up a financial plan that’s sustainable over the long run. As personal finance site Wealth Redesigned explains, your financial well being is determined largely by the habits you form. Rather than approaching a purchase or a financial decision from the perspective of whether or not you can, ask yourself if you should:

Making larger purchasing decisions with a buffer mindset can be tricky. It’s not a question of “can I afford it?” because if they wanted to, these people could probably write the check or line up the financing. It’s a question of “should I afford it?” What will taking that big vacation, upgrading to a nicer car or remodeling a bathroom do to the bigger financial picture?

By running your purchases through the filter of “should”, you can gain a better perspective on your overall finances. Sure, you could buy a new laptop with your tax refund even though your old one works OK, but you’d probably be a lot happier in the long run if you put that money towards your credit card debt.

Should I afford it? [Wealth Redesigned via Rockstar Finance]


The Cheapest NBN 50 Plans

Here are the cheapest plans available for Australia’s most popular NBN speed tier.

At Lifehacker, we independently select and write about stuff we love and think you'll like too. We have affiliate and advertising partnerships, which means we may collect a share of sales or other compensation from the links on this page. BTW – prices are accurate and items in stock at the time of posting.

Comments


One response to “Don’t Ask ‘Can I Afford It?’ Instead Ask ‘Should I Afford It?’”