I bought a fifth car for our family this past week. As a family of five, we all seem to be moving in different directions with varied schedules. Last summer, we shared four cars. It was fun, but not something we want to repeat again! Today I want to discuss how to spend money on yourself and your family and feel great about it.

Too often, investors save and plan for tomorrow but feel guilty or anxious when it comes to spending on today. This is to be expected as it can be challenging to flip from savings mode to spending mode and back to savings again. The psychology of money is real and affects each of us differently. What I share with clients is that spending money is easier when your money has a purpose. 

Without purpose, the answer to spending money is always more. I/we need more money to take better vacations, make a big-ticket purchase, complete the home renovation, or send our kids to the best college. More is everywhere. It’s in our social media feeds, in our conversations with friends, family, and co-workers; it’s inescapable. Left unaddressed, more can take over our approach to spending. The opposite side of more is to defer gratification and fun indefinitely. This isn’t the answer either as it leads to regret. Why? Feelings of jealousy, unhappiness, and “why not me” tends to sneak into our brain and alter our thinking.

Here’s the solution to feeling great about spending. Answer these four questions before parting with your cash and/or taking on debt to make a significant purchase.

1. What’s the purpose of this purchase?
2. What are the short- and long-term financial costs?
3. What are the costs of your time?
4. What’s your exit strategy?

Giving your money purpose means you should be directing your cash to a separate account. Avoid commingling your dollars in one savings account. For decades, I’ve been sharing the value of segmenting your cash into an emergency fund, active savings, and a travel, hobbies, and fun account. It’s hard to gain clarity around a purchase when you are mentally accounting for all the jobs your cash is doing from a single account.

In our family’s case, a fifth car gives everyone autonomy with their own schedule. I won’t be forced to work from home, my wife can get to work and run errands, and the boys can get themselves to their jobs. So, our purpose for this purchase was sanity, independence, and fewer surprises.

Financial costs are real so it’s best to map out a strategy on how you’ll pay for what you want. Finance it, cash, or a combination approach? Setting time aside to talk it out in advance makes the most of what you have. Start a conversation earlier than you think. This gives you time to consider all your choices and payment methods before a decision is made. It puts you in the driver’s seat and keeps you from reacting or rushing through a decision. No right or wrong answers here; money is personal.

So now that you’ve made your purchase, how much time is involved in taking care of what you own? Depending on your purchase it could be trivial, or it may require a team of professionals to keep things looking, feeling, and running well. Too often we undervalue our time and overvalue our availability before a purchase. This can easily lead to disappointment after the transaction closes. Don’t be surprised; ask yourself how much time is necessary and when it may be available. This ensures the good vibes and enjoyment continues.

Finally, what’s your exit strategy if any? How easily can you sell what you purchased and recoup back some of your cash investment and/or time? Life changes and we change with it. We need to be open to the idea that what we bought may not make sense or be as valuable as time passes and priorities shift. When dealing with a large purchase, hopefully things still make sense in the long run. If there’s a chance you may change your mind, consider exit strategies before the purchase order is complete.

This approach is working for our family, could it work for yours? These four simple questions can help you avoid wasted time, unnecessary costs, and regret before you spend. When you feel more confident about your spending, your decisions improve in every area of life. Happy shopping!