I want it.
But how much should I spend on it?
I used to just spend what I wanted. When I wanted to. Without giving thought to how much I was spending.
I used to believe that spending more meant I was buying higher quality. And that spending less meant a better deal.
I didn’t give conscious thought to what I wanted to spend. I allowed the item, or the situation, to dictate its price to me - and I blindly followed.
I reacted to situations. I reacted to the price tag. I justified something if I wanted it enough.
I didn’t have my own personal idea about value. Or about what something was worth to me. Or about what the exchange of dollars really meant.
I was living in the world of instant gratification.
If I wanted something. I got it. And most of the time I didn’t even look at the price tag.
This is the very foundation of impulse buying.
If you haven’t taken the time to know what you want. And you haven’t consciously decided how much you’d like to spend.
Marketers will decide for you.
They know that they can seduce you with a sale.
Or a brightly placed display.
Or an “Only 3 left.”
They know that they can tell you why it’s urgent to spend. Now. This much.
And that it works.
I’ve spent thousands upon thousands of dollars unconsciously reacting to what the market-place offered.
I rolled out of a car lot with a brand new car. (Just take it over-night and see how it looks in your garage.)
I bought a Gucci dress that I couldn’t afford. (It was 30% off! When is Gucci ever on sale.)
I ordered a $400 bottle of wine at dinner - knowing full-well that I have allergies and can’t taste the difference between a $10 bottle and a $400 bottle. (Ordering the sommelier’s suggestion will make me seem so chic and knowledgable.)
So, either you can do it my way - and impulse spend yourself into a big black hole of debt - before you learn your lesson.
Or. You can learn a few tricks and apply them to your relationship with money.
The way we think about a purchase determines the way we feel about it. And my goal is to help you deliberately feel good about any transaction.
My favorite money feeling is abundance. It’s a feeling that comes from open, generous, there’s-plenty-of-everything thinking.
If you can’t find a way to feel abundant, then it’s not something you should spend your money on.
The price definitely influences the way we think about our purchases.
If the price is too low, we tend to see the item as cheap, untrustworthy, poorly made, and not as valuable. If the price is too high, we tend to see the item as not worth the exchange, not worth the commitment, untrustworthy, or a rip-off.
There is a sweet spot for every transaction. It’s what I call the Saturation Point. It’s the point where the price is saturated with as much abundance as it can hold. This point isn’t necessarily an exact dollar amount. The Saturation Point is typically a small price range made up of a low point and a high point.
The high point is where paying a higher price diminishes the abundance. It’s the point of diminishing returns. When the price is raised past this point - the item doesn’t continue to improve for us. This is completely subjective and will change from person to person. It’s not about actual value - it’s about what we personally value. If the item’s price is higher than this - it’s better to keep our money rather than to buy the item.
The low point is where paying a lower price diminishes the abundance. It’s where the item isn’t worth ‘the deal.’ It seems too cheap. The item has lost it’s value. Again, this is completely subjective and will change from person to person. It’s about what we individually value. If the item’s price is below this point - it’s better to keep our money rather than to purchase the item.
When we don’t know our Saturation Point - we are more exposed and reactive to marketing. We spend too much on something because we are told that the higher price makes it better. Or we spend too little on something because we want to get a better deal, or get it now, and therefore sacrifice what we are really wanting.
We can determine our Saturation Points for any item. Big, medium or small. For instance, a cup of coffee. My Saturation Point for coffee looks like this.
Spending under a dollar makes me suspect that the coffee might be gross. Especially at a liquor store or gas station. Don’t get me wrong, it might be the best coffee in the world - but it doesn’t matter because I’ll never know.
The Saturation Point is my story about what I want to pay. It’s not necessarily based on reality. It’s based on my story. And my story says that coffee priced under a dollar at a place that also sells Twinkies and lotto tickets is probably pushing dehydrated gray powder that they put into murky tap water and try to pawn off as coffee. Yuck.
Spending $1 on coffee is still a little suspect. I’d have to see where it came from. I’d probably smell it. Look at the color. If it’s being sold in a styrofoam cup - then no. If it’s in a paper cup. Then yes.
$2 feels good. That’s a typical price for good coffee (in my mind.) That’s coffee house coffee. Dark black. Smells great. Even in my mind.
$3 still feels good. This is definitely on the high side of my Saturation Point. If it was in an airport, or mall, or some other place where there’s the convenience factor that I’m paying for - then it would be a yes. But if this $3 cup was just an average coffee house - in an among other coffee houses. Then no.
$4 doesn’t feel good anymore. It’s too much to pay. I don’t want to spend that much on coffee. And I don’t care how good it is at that point. It’s past my Saturation Point.
So, dollar by dollar, I determine my Saturation Point for a cup of coffee. Anything between 2-3 dollars feels good to me. Paying more than $3 doesn’t add more abundance or more value for me. Paying under $2 doesn’t add more abundance or more value for me.
The important thing to know is at what point does spending more (or less) money on an item make the item (or purchase) better?
At what point does spending more (or less) make the item (or purchase) worse?
This can apply to small things on your grocery list like a loaf of bread, avocados, or bananas. I’m not willing to buy a bunch of bananas for $1. If the price is too low on bananas, I don’t feel good about paying my money toward an industry that might be promoting unfair and unsafe work practices. When I pay a higher price for bananas, I find my Saturation Point. I like supporting fair-trade bananas. Yet, I am not willing to pay $10 for a bunch of bananas. At that point, it is higher than my Saturation Zone - and I have stopped feeling abundant about the price.
Knowing your Saturation Point for big-ticket-items helps simplify the purchasing process. Know what you’re willing to spend on a car, a vacation, a new computer, or a house. And that it’s based on feeling good - rather than on the market or the merchant.
On a larger scale, we can look at the total amount of possessions we own in terms of Saturations Points. We have houses, cars, toys, clothes, and vacations. The money that we spend on these things can add immense value to our lives. It can make our lives easier, better. But past the Point of Saturation, spending more actually makes our lives more complicated and worse. The bigger house, the better cars, the extra stuff, the storage units, the food we throw away each week, the toys that are bursting out of our kids closets. These things do not make our lives more abundant. They don’t create ease. They don’t simplify our lives. They do not bring more joy. They bring more headaches, more need for storage, more time for organization.
Instead of having the money in the bank, we have a piles of stuff.
This isn’t about not-buying. This is about really understanding what you desire and why. It’s about determining your own value system - and trusting yourself. It’s about caring about yourself. And your money.
When we spend our money mindlessly, without checking in on our Saturation Points, we may spend too much. And spend money that we regret. Or we may spend too little. And may settle for something that we really didn’t want.
I want you to have what you truly want. I want you to have a rich and meaningful life.
I want you to allow yourself to have the things that you desire.
And. I also want you to have money in the bank.