Careless spending that doesn’t align with our values is bound to catch up with us by sapping our resources and potentially landing us in debt.

— Susan Johnston Taylor, How to Splurge...Mindfully

The U.S. Bureau of Labor Statistics finds that housing, food and transportation add up to about $35,000, or 62% of the $56,000 that average households spend each year. These categories include groceries and restaurant bills, monthly rent or mortgage payments, and every car-related cost under the sun. If you seriously want to reduce your spending, these costs are the best place to start cutting.

Food choices are the easiest and fastest to change by making smart decisions like cooking at home, shopping in bulk, and yes, ditching the daily fancy coffee habit. Switching from workweek convenience food options to eating a packed lunch and home-cooked meals can cut your food spending in half.

Harder costs to lower are the two biggest: housing and transportation.

The difficulty comes because renting or buying a home or leasing a car are long-term commitments and this makes people think the costs "balance out over time" because they'll be paying them off longer. But choosing a home or car that’s larger or more luxurious than you need is guaranteed to destroy your budget and leave you with limited financial flexibility for a long, long time. With no cash on hand, all it takes is one unexpected emergency to get you into a vicious debt cycle.

Taking a hard look at what you can actually afford in these three biggest spending categories will free you from having to cheap-skate through the rest of your life. Making smarter choices on big ticket items will ensure you have enough cash left over for gifts, vacations, and any pesky emergency life throws your way.

Making better spending decisions is all in the thought process:

Step 1: Breathe now, buy later

Portrait Of Couple Standing Outside Home
Monkey Business Images/Shutterstock

We're surrounded by marketing stunts designed to push us to make huge purchases without thinking.

You might casually check out a car sitting in a lot by the grocery store and find the sales guy crowing "No money down!" and shoving lease papers into your hands in five minutes flat. Or a store might offer to let you pay for a massive TV and gaming bundle in weekly installments, conveniently avoiding the huge up-front ticket price. And it's now standard practice for realtors to bring together crowds of buyers to see a home, pitting them against each other in an emotional bidding war on the biggest purchase of their lives. These pitches are all about pressuring people to make snap decisions on big purchases with serious, long-term consequences.

Frankly, there's no better way to screw yourself financially than making a hasty deal with the devil.

When faced with a big-ticket item that you want to buy right then and there (particularly under pressure), take a deep breath and step back. Instead of letting yourself get carried away with how great it would be to furnish/ride/wear that awesome thing, go home, have dinner, relax, and mull things over a bit.

For a big purchase, wait at least 24 to 48 hours to cool off before buying it.

Take this time to hop on the web for a little comparison shopping. How does this item compare to others in its class? Check pricing, product satisfaction and longevity, and even the seller’s feedback on their business website or through Google reviews. A seemingly good price might come with some unpleasant strings attached. Getting some space between yourself and the object of desire During that period, gives you a chance to think it through potential consequences and evaluate everything your budget and needs. For example, does the item fit your actual monthly and yearly income, or does it fit the lifestyle you wish you had?

The urge to buy usually goes away in a day or two, and the purchase might not seem so important anymore. Breathe now, buy later is the first step to eliminating big-ticket impulse buying and ensuring that you have time to make a rational, not regrettable, decision.

Step 2: Notice your emotions

We all indulge in a little retail therapy now and then, and of course it's natural to want to enjoy a reward for our hard work. The issue occurs when emotions carry over into bigger, more expensive purchases.

Sometimes a purchase doesn't even seem like a big one, but the emotional push is there. Think adopting a pet for company or moving to a new place to get a fresh start after whatever happened. Both the puppy and the new home are common ways that people try to fill voids in their lives or fix relationships. It's pretty clear to see how misplaced emotional spending can morph into Money Problems down the road.

Noticing your emotions before you buy something means simply acknowledging them. Don't judge or punish yourself by denying yourself something that will make you feel better-as long as you can afford it. Simply by noticing what's driving you to shop, you'll be able to breathe first and buy later.

Taking a moment to do this might even lead you to think of a different way to celebrate your victory or soothe your exhaustion, like spending quality time with your special person/people or having a relaxing, pampered evening to yourself.

If you've taken these first two steps to pause and evaluate the gut feelings pushing you to make a big purchase, and you still think that big purchase could be a good idea, then it's time to get serious.

Get into the nitty gritty and ask yourself the following questions. Make it formal and write down your answers so you can really examine the situation clearly:

1. Cash or credit?

Will you be making this purchase with savings, or will you need a credit card, lease, mortgage or other debt instrument to complete the purchase? Using your hard earned and saved money is often preferable to using credit or getting a loan, because these last two options can help you make a purchase that’s over your budget.

If you don't have any money set aside at all, then this purchase might be out of your league right now.

2. Is this a want or a need?

A want is something you would like to have. A need is something you can’t live without.

Ask yourself whether you really need that thing at this very moment. You've managed to live this long without it, so why do you need it now? Determine the real reason why you are buying it-whether it's a need, social pressure, or something else.

3. What other financial commitments do I have?

Make a list of any existing financial commitments you already have. Are you leasing your car? Do you have student debt to pay down? Rent? Insurance? Look at your income and how much you already pay for these things every month, then decide whether or not you can comfortably add to your existing monthly payments.

4. Is it this something new or a replacement for something old or broken?

If you're buying a replacement, then have you tried to fix the current item? If it's not fixable or worth fixing, then go ahead with the purchase but think about how long you will need the replacement to last. And how much of an upgrade is it, really? If you're not getting much more for your extra money, then it might not be worth it.

5. How long will it take me to earn this money again?

Spending is far much easier than earning. We recommend you think about the amount of time and effort that went into earning the money you plan to spend. If you feel that what you're buying is worth the time and effort, you spent to earn the money, then you’ll feel more confident about moving forward with your purchase.

6. Is this truly the best time to buy?

You might be able to save or remain financially secure by waiting a bit before making this purchase. Are interest rates expected to decrease? Are you expecting to get a bonus in a couple of months? Will this item go on sale soon?

7. Is this the best deal I can get?

Have you done your research? Did you take the time to shop around for better deals elsewhere? If you're sure that you're getting a fair price, you'll feel more confident about moving forward with your purchase less likely to regret your decision afterwards.

Don’t let yourself get turned off by this process! The decision to spend a large sum of money is should take time.

Thinking a purchase through and doing your homework before jumping into a huge expensespending a large sum of money is essential to keeping your budget in the safe zone.

Once you've taken the steps above, you'll be in a much better position to make a smart buying decision. And if you're still unsure about how a purchase will affect your finances down the road, you can always speak with an accredited financial advisor to clear things up.

Do you know a big spender who could use some advice on making large purchases? Share this article and help them get on the right track to spending wisely!

About the Author

Richard Glunt

Richard Glunt

Freelance Contributor


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