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In this video, Chelsea shares the key questions to ask ourselves before making any serious spending decisions, so we can be sure not to make a big spending mistake. Want to boost your saving skills? Check out this video: https://youtu.be/XlWMKnKndzc.

Go to https://curiositystream.com/thefinancialdiet for unlimited access to the world’s top documentaries and non­fiction series, and for our listeners, enter the promo code ‘thefinancialdiet’ when prompted during the sign­up process and your membership is completely free for the first 30 days.

The value of $100:
https://www.usatoday.com/story/money/personalfinance/budget-and-spending/2018/08/10/average-cost-of-date-in-each-state/37292105/

Why we buy:
https://www.psychologytoday.com/us/blog/the-intelligent-divorce/201602/why-people-buy

Emotions lead to spending:
https://www.marketwatch.com/story/americans-are-emotionally-overspending-2017-02-27

We buy -- and throw away -- way too many clothes:
https://qz.com/1212305/americans-have-stopped-trying-to-stuff-more-clothes-into-their-closets/

Buying for brand names rather than quality:
https://www.salsify.com/content/2018-consumer-research-report

The items worth investing in: https://www.nytimes.com/2019/02/06/smarter-living/spend-money-where-you-spend-the-most-time.html

How to invest $100:
https://www.goodfinancialcents.com/how-to-invest-100-dollars/

Where we spend our money matters:
https://grasshopper.com/resources/articles/small-business-saturday-statistics/

Watch more of The Financial Diet hosted by Chelsea Fagan here: https://www.youtube.com/playlist?list=PLD30V46E07RR99cC0gCjKUbt-BKoDUcnc

The Financial Diet site:
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Hey, guys.

It's Chelsea from The Financial Diet. And this week's video is brought to you by Curiosity Stream.

And today, I'm equipped with my new bangs, my Crystal Light pink lemonade, and lots of hard money facts because we're going to talk about the important questions to ask yourself before making a purchase, and not just any purchase, but a purchase over $100. And why are we talking specifically about the decision to spend over $100? Because for many of us, $100 is the amount of money at which purchases start to feel expensive and important.

It's an accessible amount of money in the sense that most of us have probably spent $100 on something in our lives. But it's still an amount with which we could be making a lot of financial decisions, and for many of us, the choice to spend that money can feel like an indulgence or a luxury. $100, for example, is around the average price of a nice date for two, a fun electronic gadget like an instant camera for a trip, or sometimes the grocery budget for an entire household for the week. So $100 can obviously mean a lot, but more than half of Americans admit to having spent up to $100 on an impulse buy.

So it's a number that feels possible to spend in one go, but still packs some financial punch, particularly when you consider the fact that $100 could be used to do something like open an investment account or put towards retirement or save for a much more big-picture goal, like buying a home. Actually, we did an entire video on the smartest things you can do with that same $100, if you'd like to check it out in the description. The point is, $100 is a number that we can all interpret in different ways and justify in spending totally differently.

But it's a valuable number and an easy one to keep in mind when we're judging the value of any given purchase. So while you might use these questions for purchases at slightly different price points, once we start getting into the territory of $100 or more, these questions become incredibly important. So how do you determine if something is really worth $100?

With these 11 questions. Number one, why do you want to buy it? So I live in New York City where many bars charge $20 or more for a cocktail.

And no, you did not mishear that, $20 or more for a cocktail. For example, I recently took a girlfriend out for her birthday and decided to treat her. At the bar we went to, we each got two drinks and shared two small snacks, and our bill with tip was over $100.

Now granted this was a pretty nice place. And I have zero regrets about it because she's a great friend who deserves special moments like that, and I'm happy to share them with her. But you can spend $100 in the blink of an eye on much shittier experiences in New York.

And I have fallen prey to that many times because I failed to really consider why I was doing it. And if I answered that question honestly, a lot of times, the answer would have been because I'm already here. And when it comes to the why of our purchases, our reasons for making these kind of spending decisions are a lot less clear-headed than we might like to think.

According to Psychology Today, a buying decision is the result of a consumer learning pathway where the consumer must learn about a product or service and relate it to their specific situation. Basically, consumers make these decisions by integrating the product or service into the overall picture of their life. And so it's in the interest of people selling us these things to convince us that these products will lead to that life being better.

And with relatively new pressures, like how something will look on social media, for example, the reasons why we're making purchases can become more and more external, about imagined versions of ourselves, or outside pressure from friends or family, or imagining that something might look really, really good on an Instagram. And with 49% of Americans reporting that emotions like stress or excitement drive them to spend, even when they don't necessarily have the budget for it, this toxic brew of outside influences and our own brains tricking us into thinking we need things we don't often leads us to spend for reasons that we can't even totally identify. So in every purchase, but especially these more significant ones, take a few moments to truly ask yourself why you're buying this item or product or service, in particular.

Is it because of the way it makes you feel, because if the brand name, because you think other people will think it looks good, because you're stressed out because you feel inadequate or self-conscious? Answer those questions before you swipe your card. Number two, does it fit with your lifestyle?

One of the most important changes in my financial life, bar none, has been the fact that I used to spend desperately on things that I thought would make me a better or different or prettier or whatever-er version of myself. I'll hearken back to the tragic tale of the Ugg boots that I recently referenced in a video, to give you just an idea of how misguided so much of that spending was. And though every spending decision I make now isn't totally perfect, I can say that the vast majority of my spending is for the life I currently live and know I will get use out of.

But to my earlier point about how businesses are marketing their products and services, it's in their interest to convince you that the life you live will be better with this product, and even imagine that you will be some different version of yourself. For example, if you're someone who has a hard time motivating yourself to exercise, is having the really adorable $100 Lululemon workout outfit going to change that? Almost certainly not.

You will just be the person who now goes to Duane Reade in the $100 Lululemon workout outfit. Or if you, for example, walk 10,000 or more steps a day just living your normal life, are the really adorable, but extremely uncomfortable, shoes going to be the right choice? Clearly, no.

And if you never cook, is now the time to buy a bunch of fancy kitchen gadgets that you imagine will just whisper to you from across the kitchen and somehow convince you to cook more? No. I know multiple people in New York City who basically never cook, yet own a KitchenAid stand mixer, which says a lot about New York City, quite frankly.

The point is, never spend $1, and certainly not $100, on an item that will eventually, hopefully, turn you into a different person or create a new habit or make you do something that you're not currently doing. You have to prove to yourself that you will get use out of an item before you can justify buying it. Number three, do I have space for it?

So I live in New York City, once again, for the 15th time this video. So I live in a two-bedroom, one-bath apartment with extremely limited closet space. So every time I watch stuff like Marie Kondo, I am just marveling at the fact that these people have the square footage required to accumulate the 17 houses worth of bullshit that they're accumulating.

I hashtag, cannot relate to this lifestyle. And I wish all of you well who are able, physically, to stuff all this stuff in your home. And I will say, although sometimes it can be annoying not having enough space in my closet for both my winter and summer clothes, on some level, I'm grateful because it really makes you edit and decide what is worth actually storing in your home.

But many people do not live like we do in New York City. And as we've mentioned in other videos, which we'll link to in the description, homes have steadily become bigger over the years, especially in recent years. And in large part, it's because as we accumulate more things, we need more space to store them, and as we have more space, we need more things to fill that space up.

But if you are someone who doesn't have overflowing amounts of space, each item you buy has to have a solid place in your home where it fits and can be clean and out of the way, and not spilling over into your daily life, so you don't end up with that frequent feeling of, ugh, my entire living space is covered in so much bullshit. But even if you do have the physical space, constantly buying more of things leads to a cycle of wasteful overabundance, like the fact that the average American buys 65 new garments of clothing every year and throws out about 80 pounds of clothing every year. Remembering that each new item brought into your home should be useful, valuable, and well stored will often stop you from spending on more stuff you don't need.

Number four, do I already have something exactly like this? There are probably few more universal examples of this than the smartphone you currently have in your pocket or your bag. How often do you replace devices like this, even though your old one is still very functional, because a new one's on the market?

And you want to have that shiny new object or the selfie camera that shows such a high definition of your face that it ruins your self-esteem. So much of us replacing things that are still very functional comes down to a question of marketing. And even though these things may not always be as obvious as the smartphone being replaced before the old one needs replacing, it's useful to remember how often we buy things when we have a just-as-good version at home that maybe could use a little bit of repairing, but it's still very much usable.

For many women, I know that this also heavily applies to fashion. You don't get to the 65 garments acquired per year and 80 pounds thrown away without buying a bunch of clothing that you already basically have. Making sure that each item serves a unique purpose within the greater ecosystem of that category of item is incredibly important.

For a wardrobe, things like having a capsule wardrobe will ensure that each item serves a specific purpose, and you're not just mindlessly replacing the same types of items because it's what you default to. And when it comes to things like your groceries, you can avoid often buying the same thing that you already have, And then inevitably, the older one goes bad because you bought a new one, even though you still had the old one, by frequently doing checks of your refrigerator, freezer, and cabinet, and never going shopping without a very comprehensive list that shows you what you already have. Any purchase made when you still have a perfectly good version at home is a purchase wasted.

Number five, how many times do you expect to use it? So it can be very easy to get to the $100 price point at, for example, a fast fashion store, when you're like, wow, each of these items is like 9.99. How cool.

But how often are you going to be using those $9.99 dresses that are basically made out of plastic? Chances are, a lot of them will be destroyed by basic wear and tear or be out of fashion in a matter of months, or not really even fit you after one trip through the washer and dryer, whereas a more sturdy, higher investment item may be worn dozens or hundreds of times. A simple formula to always have in your back pocket is cost per use, the cost of the item divided by how many times you use it.

A $10 dress you wear twice is then, obviously, much more expensive in the long run than a $100 dress you wear 100 times. So for every item you're buying, making sure to invest in signature items is of the utmost importance. Items that are multi functional or easily repaired or fit seamlessly into your day-to-day life are the key items to be targeting.

Anything that you're not totally sure you would use a ton is almost certainly going to be a mistake. Number six, can you thrift, rent, or borrow a less expensive version? Tons of rental services for things like exercise equipment, clothing, or even furniture or electronics are on the rise.

And part of this is because more and more people have realized that getting something that may be great for a particular event or a particular need, or even the duration of a one-year lease on an apartment, isn't worth buying permanently. This can easily be tied in with cost per use, but for example, if you are moving into that aforementioned one-year lease, it's worth taking a look at several items of furniture being also rented for that year period because not only does that mean you may not have to pay the full retail price for the item, you also won't have to pay to move it when the time comes. And if you're moving to a place where it definitely couldn't come with you, or wouldn't be worth the cost of moving, that's something to look into.

Similarly, if you're going to need a very fancy outfit for a special occasion, like a wedding, in most cases, it's way better to rent that outfit because you're almost certainly not going to wear it again. My closet is a boneyard of dresses that I've worn to weddings, which I have zero use for outside of those weddings. And while I love a black tie moment, because it's fabulous and fun and you feel like you're at a costume party, I am never, ever again going to buy myself a black tie gown because-- I'm sorry.

There's literally no other event to which I can wear an across-the-shoulder emerald green, floor-length, three-layer gown with a giant crystal brooch on it. I look like a crazy person anywhere but a black tie wedding and a museum. Similarly, thrifting is a great option for many of these same item categories, especially things like furniture, where you run very low risk of any kind of grossness, like you might with clothes or fabrics, and can get extremely useful items for bottom-barrel prices, like entire dining sets for $10, or aforementioned KitchenAid stand mixers for like $50.

They retail for like 500. I'm personally obsessed with thrifting for a lot of my home decor items, especially things like lamps or non-essential furniture. And lastly, of course, borrowing is always an option, especially when it comes to one-time-use items like those fancy dresses.

Either way, making sure to run that cost per use and not always assume that buying full price to own is the only way to go is extremely important. Number 7, conversely, should you save for a more expensive version? So about 35% of Americans say that they've chosen to buy a more expensive version of something because of positive reviews, while around 23% said that they've opted for that more expensive version because of brand association.

And it's very important to keep in mind, as we've mentioned before on this channel, that just because a brand name is recognizable does not mean it's better. And often, we end up opting for that more expensive version just because that item is recognizable or maybe aspirational, but not because it's better or we'll get more use out of it. Removing that brand name association from the equation allows you to make your decisions based on the true inherent value of something, and not just hypothetically, but in your own life.

As I mentioned before, the ultimate value of something should be determined by how much use you get out of it, and especially if these are items that you're using on an everyday basis, something like, for example, your mattress, where going for a better option could have a seriously positive impact on quality of life. Sometimes it's worth it to keep saving. Let's say you already have $100 put toward that item.

Maybe you should keep saving for $200 so you can get the version that will be better for you in the long run. But remembering to remove all outside factors, like how cute the packaging is or how much you saw that brand name advertised to you on Instagram, is extremely important to making sure that your decision to invest in something is being made for the right reasons. Despite loving a good deal here at TFD, we are not always of the mindset that the cheapest option is the best.

Number eight, could that $100 be better served elsewhere? So it can be really difficult to keep in mind the bigger and longer term goals that we might have when it comes to individual purchases. It's immediately satisfying to spend $100 and get that item that we've been coveting, or that experience we love, whereas putting $100 toward a more abstract or long-term goal can feel kind of boring, which is why it's so important, when saving, investing, or putting away for retirement, we keep in mind, not just the raw number, but what that number can become.

Things like labeling all your various accounts by their individual savings goals so they feel more real, taking the time to calculate what an individual initial investment could become with time and compound interest, or seeing how much that initial influx of cash could go toward starting you on the right path-- for example, $100 is a common opening deposit for something like a high-yield savings account-- can really help all of these longer term decisions and delayed gratification feel way more real. Ultimately, we are very visual creatures, and we crave that satisfaction. So making sure that all of your bigger goals are really as visual and present as possible is super important.

Putting $100 in account for 436589723 doesn't feel good. But putting $100 and watching that little ticker go up on vacation to Italy this summer feels awesome. Number 9, do you need it now?

Sometimes, we just can't help it, and we need an item right away for emergency reasons, even if it means we're not getting the best price. But if time is at all on your side with purchases, it's almost always better to wait until that item goes on sale, or you can buy it in bulk, or maybe even find it at a different retailer for a better price. And conversely, retailers can often use those super enticing 20% off for one-day-only sales to make a purchase feel urgent.

But that shouldn't be a reason to spend on an item that you weren't actually going to buy and don't really need. Making shopping decisions with a clear head on your timeline is the best way to ensure that you'll be able to wait for the best prices on the items you do really need, and won't be lured in by super attractive sales on items that you don't. And beyond that, even sometimes just waiting one day, not taking out your card at your laptop and impulsively buying something while sitting on your couch, late at night, maybe after two glasses of wine, waiting until the next morning in the clear light of day, to say, actually I really don't need that item I really thought I needed last night.

Unless the item's a real emergency, you can wait on it. And unless you've been meaning to buy that item regardless, there's no need to jump on sales. Number 10, who or what am I supporting with this purchase?

So here's something worth considering. $100 behaves differently, depending on if it's spent locally or at a nationwide chain. $100 at a local business keeps $68 in your local economy, while $100 at a nationwide chain keeps only $43 in your local economy. More and more shoppers are becoming aware of the ethics behind what they're buying. And in many cases, making the more ethical or local or sustainable purchase will be more expensive.

But if it is in your ability to be able to make these choices, making that a factor of your decision making is extremely important. For me, for example, making sure to source the best meat I can afford when cooking at home is not just better for the animal's welfare and quality of life. It's also better for the overall environment as well as the farmers and workers who are involved in producing that meat.

It is a privileged choice to be able to make, for sure, but the more we can count that as a factor in our decision making, the more we can make sure that these purchases aren't just good for us. They're good for the community around us. And when you're thinking about spending $100 or more, those ripple effects start to be felt way wider than just our homes.

Lastly, number 11, is it actually worth a hundred of your dollars? So start by figuring out what $100 really means to you. That means taking $100 and dividing it by your hourly rate.

If you get paid $20 an hour, that's five hours of your life that is going into buying this item. And start to make mental lists of the items that you buy, and measure them not in money, but in time. If you're buying lunch out everyday, for example, that might represent, over the course of a week, an entire day's work.

Is it worth it? Or would a less expensive alternative do a good enough job and, more importantly, save you a lot of your precious time and money to go toward more valuable things? I'm not going to pretend that every single purchase I make is one where I feel like it's totally justifiable, in terms of raw hours of my life.

But there have been many times where thinking in those terms has stopped me from buying something that otherwise felt pretty justifiable. Remembering that money is never just money, but rather a representation of your finite hours on this planet is a good way to contextualize real value. There are so many different emotional, environmental, social factors that go into every purchase we make.

And $100 can do so much more than just be spent on a frivolous evening or a piece of clothing we'll maybe never wear. And that doesn't mean it's never the right thing to spend $100 on something. Sometimes, it is justifiable, but remembering the real value of this money and making sure that each time it is a clear-headed and thoughtful decision can make all the difference.

And one of the most valuable ways to spend your money is in expanding your horizons and making you a more thoughtful and curious person. And one of the best places to do that is Curiosity Stream. Curiosity Stream is a subscription streaming service founded by the creator of the Discovery Channel, and made for those of you with no shame in your nerd game, with over 2,400 documentary and non-fiction titles from some of the world's best film makers, including exclusive originals like the Birth of the Internet, The Grammar of Happiness, or Conscious Capitalism.

Get unlimited access starting at just $2.99 a month, and for TFD viewers, the first 31 days are completely free if you sign up at curiositystream. com/thefinancialdiet, or use the promo code, the Financial Diet. So as always, guys, thank you for watching. And don't forget to hit the Subscribe button and to come back every Tuesday, Thursday and Friday for new and awesome videos.

Bye.