8 essential questions to ask yourself before making a big purchase

Apps for Spending Money Like a Millennial
Apps for Spending Money Like a Millennial

When I say "big" purchase, I mean anything that shows up on your credit card statement and the dollar amount catches your attention. That number will be different for everyone — could be $50, or it could be triple digits. In any case, if you get in the habit of asking yourself a few of the following questions before making a "big" purchase, you can easily remove some spending on items that don't add to your long term happiness and financial goals. (See also: 9 Simple Ways to Stop Impulse Buying)

1. Will I Need the Item in the Future?

When making a significant purchase, get in the habit of talking to yourself a little bit. Ask if this item is something you'll need in a week? In a month? Six months from now? Once you have your answers, then make the decision. By asking yourself the question, you can often quickly determine if it's an impulse purchase, which you'll never use regularly, or something you actually need and has long-term value.

2. Does Amazon Really Have the Best Price?

The biggest problem with Amazon is they make it so darn easy to make purchases and overspend. This is especially true if you have a Prime membership and with a single click you can have an item sitting on your doorstep in two days. It often turns consumers into impulse shoppers who rarely do price comparisons and rely on the convenience factor that Amazon provides. But in the long-run, there's no doubt you're going to overpay on many items, and at the end of the year, that money will be significant, especially if you shop at Amazon on a weekly basis. (See also: This Is How You Stop Online Impulse Spending)

I recommend disabling the "1-click" feature and disconnecting your credit card from your account, which makes it harder to complete an order. You'll be much less likely to shop, click, buy, and overspend. Also, before completing your next significant Amazon purchase, I encourage you to pull up a separate browser tab and do a quick price comparison on Google Shopping. See if the price you're about to pay really is a good deal, and then proceed accordingly.

3. What Is the Return Policy?

How familiar are you with any given store's return policy? If you're like most, unless it's a store you frequent often, you probably have no idea what the policy details are. Be sure to familiarize yourself with the policy, especially if you're on the fence about the purchase to begin with, or don't know if it's the right size, color, or variation. Will you be able to return it? What about if you open the box? How long do you have to bring it back? These are all things you need to know, so be sure to ask before you make the purchase. (See also: How to Get a Refund When Something Is Non-Refundable)

Also, be aware of the return policy of "liquidation" or "going out of business" sales. Often these type of sales have a no return policy and all sales are considered final. With the recent news of Sports Authority going out of business, and selling their merchandise to a group of liquidators, it has many shoppers anticipating a plethora of sporting good deals. Be aware that more than likely, whatever you buy you won't be able to return. So be sure that ping-pong table will fit on your patio before handing them your credit card.

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4. Is a Coupon Available?

Despite a plethora of coupon apps and coupon websites available, it still amazes me how many shoppers I see pay full-price in front of me in line, while I pull out my smartphone to access a discount. Get in the habit of always asking yourself if a coupon might be available, and then go find one. Then if you can't find one, politely ask the cashier if they have one you can use. Stores like Michaels, Bed Bath & Beyond, Pier 1 Imports, Dick's Sporting Goods, and Joann Fabrics are notorious for handing them out to those who simply ask. After all, the worst they can say is, "No, sorry, we don't have any coupons right now." (See also: 6 Ways to Score a Last-Minute Coupon)

5. Can I Find a Cheaper Alternative?

Some items have cheaper alternatives that do the job just as well, and the only difference is the price tag. Things like a KitchenAid mixer, Dyson vacuum, and Beats headphones immediately come to mind. To figure out if the "big" purchase I'm about to make has a cheaper alternative, I love using the Amazon product carousels found on the individual product page. The two Amazon carousels worth scouring for deals are titled "Customers Who Bought This Item Also Bought" and "Sponsored Products Related to This Item."

For example, the Beats Solo2 Wireless Headphones currently sell for $199.99–$299.99 on Amazon, but if you scroll down the product page you'll find some hidden gems in the above mentioned product carousels. In particular, the $44 Status Audio HD One Headphones caught my eye with their 526 reviews and an average review of 4.5 out of 5 stars, the exact same rating as the Beats variety. Then when you scroll down to the Status Audio reviews, the first review, by Michael M nails my point:

"It's interesting that the Beats headphones are such sellers and that they are making a ton of money on those because they are horrible headphones with cheap parts and are selling you on their name and as a fashion accessory. If that's your thing then that's fine. But if it's music you want to listen to clearly and accurately then buy these."

6. Is This a Replacement Item or Something New?

Ask yourself if the significant purchase you're about to make is for an item that's replacing something you own, or simply something new and shiny that you figured you couldn't live without. If it's the latter, do you really need to buy it right now? Odds are if you tell yourself "No," the must-have feeling will go away shortly as your brain moves on to more pressing things. If the item is replacing something you own that broke, are you sure you can't do a YouTube search and figure out how to fix it? Or maybe it's being sold used on eBay for a fraction of the price.

7. Should I Buy a Higher Quality Item?

Sometimes it's just plain smart to spend more money on a quality product that will last and not accrue quick replacement costs. The problem is knowing when spending more for quality makes the most sense so you don't overspend unnecessarily. A good rule of thumb is to consider how often the item will be used. If it will be used daily, or several times per day, and you plan on keeping it for years to come, then you'll want to consider the quality of the item along with the price and determine if spending more makes sense. Things like tools, mattresses, shoes, kitchen knives, cold-weather jackets, and baby gear are all items worth spending more for higher quality.

8. Have I Considered the Long Term Costs?

Stores like Petco and PetSmart make a killing on the long-term costs of their products. As a matter of fact, they wouldn't exist without them. While that cute hamster seems like a bargain at only $10, the real cost is actually in the hundreds when you consider a cage, food, bedding, and accessories. I recently ran into this issue with my 11-year-old daughter who saved up to buy her own hamster and supplies only to lose interest in the cute furball a couple months later.

Meanwhile, the long term costs of the hamster remain the same even though nobody pays attention to it. While we will be giving it away to a friend, I would have been much better off doing a test run with an animal with lower long-term costs in the beginning. Perhaps if she could have cared for a goldfish for several months, she could have moved up to the hamster. Lesson learned.

How do you noodle through big purchases and whether they're smart buys or not?

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