I used to be a major impulse shopper. So much so that I ended up with a closet full of designer handbags and shoes I didn’t need, some of which never even saw the light of day. Saying “yes” to the dress (and the heels… and the handbag…) was my MO for many years, and it wasn’t until I did a serious audit (followed by a serious purge) of my closet recently that I realized maybe this wasn’t a great personal finance strategy. I am speaking from experience when I say that buying something first and then thinking about whether you’ll actually wear it later isn’t a great way to build up your savings. And though Carrie Bradshaw famously remarked that, “I like my money where I can see it, hanging in my closet,” it’s almost impossible to turn the clothes in your closet back in to cash (trust me, I’ve tried to sell them on eBay). We at SHEfinds might seem like the last people who would tell you NOT to shop (we practically dedicate our lives to finding good sales), but we are firm believers in buying clothes that you will love for many years to come. And impulse shopping is not the way to get ’em.
If you cringe at the thought of seeing your credit card statement each month or have more pairs of shoes in your closet than you have 0’s at the end of your bank balance, you might have a little problem with impulse shopping, too. It’s okay–you’re not alone, and since personal finance isn’t taught in school and talking about money is considered taboo in our society, you probably just don’t know any better. But I’m here to share the most incredible 2-second trick I learned from a personal finance expert recently that has majorly curbed my spending. (I still shop–A LOT–but I buy things I actually want/need).
Today Show‘s financial editor Jean Chatzky appeared in a segment recently where she shared her tip for calculating your hourly worth. This dollar amount represents how much of your time at work something costs, so you can ask yourself “Is it worth it?” before buying. Here’s how to calculate yours:
Take your annual salary (say, it’s $50,000) and chop off the last three zeroes ($50). Then divide that number in half and that is your hourly worth ($25).
So, how to use it? Okay–so next time you’re shopping that designer sale and you see a pair of killer boots on sale for $500, you have that immediate gut check: they’re great, but are they worth two days of work? That’s how long it will take you to pay them off. It works in other situations, too–that $200 dinner out, the $500 car payment, the $500 laser hair removal treatment.
If it takes that many hours to pay for anything that’s not an absolute necessity, steering clear of it should be a no-brainer, right? Try it and let us know what you think!