Hint: It’s a simple calculation for the things you buy.
- TFD’s Chelsea Fagan offers some solid advice that anyone can use to plan their purchases.
- Finding out the cost per use is a smart way to think about the things you buy.
- Try running the numbers the next time you want to make a major purchase.
Chelsea Fagan is a personal finance writer and CEO and founder of The Financial Diet, a media company focused on helping women learn how to manage their money. Fagan is often asked to reveal her number one money tip. She points out that it can be hard to name one tip that everyone can follow, but this tip can be used by just about anyone: Look at the cost per use for any given purchase.
How is the cost per use calculated?
Calculating the cost per use is easy. Fagan uses the example of spending $30 on cheap shoes instead of spending $200 on a higher quality pair. If he can only wear the $30 shoes 20 times before they fall apart, his cost per wear is $1.50. But if you can wear the $200 pair three times a week every spring and summer for five years, you’re looking at 360 uses. And at $200 divided by 360 wears, the cost per wear for the most expensive shoes is about $0.55. What a difference!
How do you become more intentional with your money?
I’ve definitely been guilty of buying things without thinking too much about them first. But stopping to consider this math before making a purchase keeps me from blowing my bank account.
Spending more on a purchase that you will use more often and for longer allows you to purchase a higher quality version. There are some shopping categories, like electronics and furniture, where this model can really work well.
Fagan also points out that an important key to getting the most use and value out of the things you buy (especially expensive and expensive items) is to take care of them. I’ve been a believer in this for a long time, and I’d rather keep and care for, say, a smartphone for three years or more than run out every year to buy the latest model.
And you don’t have to obsessively track your usage of an item, but it’s something to think about. If you make an expensive purchase and then don’t use it as much as you thought, you can remember this for the next time you want to buy something similar.
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How can you apply this advice to your own expenses?
Fagan’s advice doesn’t really translate to single-use items. But it’s great advice for larger, more expensive purchases, and good to keep in mind if you’re trying to break bad spending habits. Here are some examples of where I apply this type of cost analysis to my own purchases:
- Bed sheets: I have high standards when it comes to bedding, and I always buy 100% cotton sheets. For a queen-size bed, they cost about twice as much as those made of other materials. But they last years longer and wash beautifully. For several years of good nights sleep, they are worth it.
- Pet furniture: It’s no secret that my cats are spoiled, but buying higher quality furniture for them is a smart financial decision for me. Cat trees and other parts that can withstand heavy daily use and also take apart and put back together cost more, but the price is justified because I don’t have to replace them as often.
- Cookware: If you like to cook as much as I do, you’ll understand why I spend more on high-quality cookware. I have some pots and pans that have lasted 10 years and counting, and I use them almost every day. They have been an investment in future delicious meals.
As Chelsea Fagan puts it, “Ultimately, no one can tell you which purchases are worthwhile and which aren’t in an abstract sense. All you can really use to judge your spending habits is how valuable a given purchase is to you.” you.” Try to apply this advice to your own life and really consider the cost of a purchase based on usage before opening your wallet.
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