Rather than thinking about expenses in terms of money, I want you to consider expenses in terms of your time. Calculate how much money you make per hour; then consider how much of your time is being spent to acquire your next purchase. You aren’t spending your money, you’re spending your time! Think about that new iPhone you really want. You know the one with all the latest features, the one everyone else will have. Take that $1,000 price tag and divide it by your hourly wage and consider how much time you are really paying for the latest gadget. Is it really worth that much of your time? Don’t forget that time is finite (it’s not renewable) – try as you may, you can’t create more time. Once you use it – it’s gone!

Let’s say you do the math and determine it’s still worth it. I also want you to consider the opportunity cost. Opportunity cost is an accounting term that refers to the foregone value of an alternative (#FOMO, #YOLO).  What are you giving up by spending the money now? What is the cost of missing out on an alternative use of this money?

Let’s use an example to illustrate the opportunity cost concept. Let’s stick with the $1,000 iPhone (might be more than a week’s worth of your wages). That same $1,000 could be used, instead, to invest in your retirement; that’s the alternative in this example. That same $1,000 will become almost $16,000 in 30 years (10% compounded annually). So the opportunity cost of choosing to spend $1,000 now, is short-changing your retirement by about $16,000. Are you stealing from the future? Your future. Are your purchasing decisions today delaying your financial independence day?

I’m not saying you shouldn’t spend money, certainly not, but I do want you to consider the consequences of your purchasing decisions and I believe you should ask some hard questions before you buy:

1)            Can I really afford this? Does it fit in my monthly budget (w/out debt)

2)            Is it a good value? Remember, Price is what you pay, value is what you get. Do some research online and compare this item to it’s competitors; maybe there is an alternative (used maybe) that costs less?

3)            Is this item really going to make me happier two weeks from now?

4)             Does this help or hurt my goal of financial independence?

5)            Do I want to look rich or be rich? You probably can’t do both.

6)            Is it really worth the time I am going to have to work to earn it?

7)            How long would I have to save to pay cash for it? If it’s truly a priority then make the effort to set aside enough money up-front.