Wednesday, November 12, 2008

In These Hard Times, How To Choose What To Spend Our Money On?


Carats or Carrots?

As the recession hits, it becomes ever more difficult to decide on what to spend our hard earned money on. How do we decide on what to buy? It is always painful to have to make a choice, but if we are forced to do so, the following guidelines might be useful in our evaluation.

1) Consider the value-add of our purchases

This might seem obvious, but the truth is, many of us approach value-measurement in the wrong way. We often look at a product's features, specs and special touches and then decide if they are worth the money. But this type of evaluation is not always relevant, simply because we may not be able to fully utilize a product's features. If all you ever do with your handphone is send a few SMSes a day, a very cheap one would do. Only if you know for a fact that having the GPS function and Mobile Internet Browsers and built-in Cameras would really add value to your life should you get that PDA phone. Always think about the value of product features to YOU, and not just the market value of the feature.

2) Buy what you need, instead of learning to need what you buy

The bulk of our purchases should be initiated by us, and not be an outcome of some idea planted in us by advertisers. We should take an inventory of our lives and decide what to purchase to improve it, and not be told what would improve us. Of course we also need to be open to being introduced to new stuff once in a while. But always be careful to listen more to the reviews and comments of new products, instead of sales pitches by the sellers.

3) Consider the value-retention of our purchases

Some stuff have better value-retention than others. Land, for instance, never loses its value. Not only should we learn to seek value-adding purchases, we should also seek out items that do not lose their value-in-use too quickly.

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