10 Ways to Tell If You Can Afford It

Frequently, when I go to the store and look at something I want to buy, a little voice inside me sometimes says, ‘you can’t afford that’. I also talk to many people who want to buy things but are not sure if they can afford them or not. So, I’ve come up with a guide that should make it fairly clear, whether or not you can afford something:

1.) If you have to use your bank overdraft, you can’t afford it. Bank overdrafts are really expensive.

2.) If you have to use your credit card and you can’t pay the bill in full the next month, you can’t afford it.

3.) If your credit cards already have balances on them, you can’t afford it. Pay them off before you buy anything new.

4.) If you have to lower or miss your monthly retirement plan contribution, you can’t afford it.

5.) If your retirement plan is less than it should be, you can’t afford it.

6.) If you have to use one of those don’t-pay-for-one-year plans, you can’t afford it. I hate those plans.

7.) If you have to tap into your emergency fund or if you don’t even have one, you can’t afford it. It’s so important to have something to fall back onto if a catastrophe happens.

8.) If your job situation is precarious – frequent layoffs or you’re not sure about the status of your company – you can’t afford it. If you’ve just started a new job, you may not be able to afford it. Wait until you’ve passed your probationary period.

9.) If you’re over budget on certain expenditures in the month, you can’t afford it. That is, if you’ve overspent on one expense category (eating out?), something else will have to make up for it.

10.) If the economy is heading into a recession, then you may not be able to afford it. Take a wait and see approach.

Of course, if the opposite is true, you can probably afford it. If you’re finances are solid, you have all your bills paid off, you’re debt-free, you’ve met all your financial goals for the month, your job is fairly secure, then I would say, you CAN afford it!

We all know that in life, it’s important to have fun. But, what’s so fun about being racked with bills and forced to stay in a job you don’t like to pay them off?

What’s fun about stressing whether or not you’ll have enough money to cover your bills for the end of the month?

"The Strump Financial Blog - a (sometimes) irreverent and (hopefully) useful take on personal finance and investing. Personal finance is fun."

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