There will be no more mentally calculating what's in your bank account if you ask yourself these four questions first. Credit: ThinkStock
YouNeedABudget.com's director of outreach Mark Butler gives tips on managing your money — before you get to the register.
The word "afford" annoys me. A lot. When people drop "I can/can't afford it" in a conversation about a purchase, they act like there's some strict math behind their declaration or they've done a full analysis. But what analysis did they actually do?
Depending on the person, being able to afford it could mean:
• It doesn't zero out or overdraw his or her checking account. • It doesn't max out his or her credit card. • He or she has actually budgeted for the purchase. • He or she is paying cash.
We don't have a universally accepted test for the concept of "afford," so it's meaningless to use it in a sentence. Once I realized there's no real math behind a person's use of "can/can't afford it," I wondered more about what thoughts and feelings drive the use of the phrase.
I speak Spanish, so I turned there to see if the translation would shed light. Even though I spoke Spanish all day every day for two years, I couldn't come up with a way to express the idea of "can/can't afford it." So I turned to Google. As a translation for "afford," Google Translate offers permitirse, meaning "to permit oneself."
"I can't afford it" becomes "no me lo puedo permitir" — I cannot permit myself. "I can afford it" becomes "me lo puedo permitir" — I can permit myself. The Spanish translation of this concept of "afford" seems more honest: I can or can't permit myself. In other words, we want to attach some sort of mathematical validation to our use of "afford," but it really comes down to whether or not we give ourselves permission; whether or not we feel justified.
There are more useful questions than "Can I afford it?"
• What else could I buy with this money? • How much would these dollars be worth if invested rather than spent today? • What is the short-term value of the purchase? • What is the long-term value of the purchase?
Own your spending decisions — especially those big enough to significantly impact your financial future. Forget the useless idea of "affording" a thing and honestly evaluate its costs and benefits. When it's clear the benefits outweigh the costs, buy without guilt. When the benefits aren't as clear, keep your money in your pocket.