If you ever shopped for a cell phone, a television or even a car, you probably know that having the best and latest doesn’t last except until a new model is released. Then, your phone — or TV, computer, tablet, car, etc — is no longer the coolest, latest plaything.
Despite this inevitability, people tend to fall into the cycle of endless upgrades — sometimes to get something better, or because something better has become available, or just an impulsive response to pushy marketing.
Each upgrade comes at a price. Even worse, people develop a habit of giving in to unnecessary upgrades, which wreaks havoc with their budgets. Their financial choices may appear illogical even when taking personal preferences into consideration.
Have you seen someone skipping a regular family vacation to upgrade a one-year-old car? Have you heard someone who complains that a critical home repair project can’t be done because of the lack of funds, then spends a bunch on electronics?
If someone you know is — or you are — falling into this cycle that mixes up priorities, serious planning is needed to set priorities. Here are a few points to get you started.
Set and stick to time frames
Whether it is a small or big upgrade, don’t just do it on the spot. If you come across a great deal on a more advanced computer, pass on it if you had no plans to get a new one within a particular time frame — this winter, this year, etc. Instead, focus on what is next on your purchase list. It could be necessary car maintenance, home repairs or even paying off some debts on your credit cards.
If these are your immediate goals, make sure you get them done before you jump into an unplanned purchase or upgrade. To help you stick with your plan, have written or mental notes on what’s next. By doing so, you remind yourself of the priorities that must be done first.
Beat an emergency
In many cases, people justify upgrades to others, like a spouse (if any), and themselves by statements such as: My computer is acting up; the refrigerator is on its last leg, etc.
Although that sounds like a good plan to get a lower price on something that you will need in the near future, the question is: When should you beat the event of having an expensive item breaking down? The near future can be weeks or years in most cases.
So be realistic about that upgrade. If your computer, for example, can run just minor repair for another year or so, then push the purchase down the road. Justifications are just excuses to change plans, so stick to your plans closely and don’t fall into the trap of impulse changes motivated by shiny new things.
Find satisfaction
Why do people upgrade their gadgets, cars and the like more often than anything else? It is because these items provide instant gratification. They are fun to use. They can show status. And they are accessible, and highly marketed. Meanwhile, putting money aside for retirement — for example — is an abstract idea somehow, especially if you’re in your twenties. You can do it later, right? How about paying down you debt? That also can wait until next month, and although it can be a relief, it does not provide an instant gratification.
So what you really need is a change in mindset. For example, if you have a clear plan for how long it will take you to pay down debts, you can begin to see an opportunity for some disposable income that can be channelled into savings or new purchases. Similarly, when you begin to knock off some items on your must-buy list, you will move to lower-priority items.
In short, prioritising is the key to find out if spending even just a couple of hundreds of dirhams on an item makes sense or not. Coupled with a strong will to stick to a plan, you will be able to meet your financial goals, save and also have fun items that you enjoy.
Money in the right:
Impulse upgrades are similar to impulse shopping
Look into your priorities first
Have and stick to your goals
Find satisfaction in checking off priority items
The writer, a former Gulf News Business Features, is a Seattle-based editor.
