In America, we have a lot of choices when it comes to the things we buy. Think about it. When is the last time you bought something and there were no options – only one item for purchase. If you go to a restaurant you will usually receive a multi-page menu describing all the various options. The Cheese Cake Factory menu is thick as a book. It can be overwhelming. Visit an American grocery store and you see how many different kinds of Ketchup there is. I like hot sauce. It is amazing the number of options you have when it comes to buying hot sauce. Let’s talk about Starbucks – the options seem unlimited. It is a pet peeve of mine to stand in line behind someone who takes forever to order their drink. It is not like you are making a life changing decision, but you would think so based on how difficult it is for some patrons to make a selection. Even after you order the barista may ask you more questions about what you want – whip or no whip? Really.
I am a big fan of not overthinking things when possible. With that in mind, I recommend that you not waste your mental capacity on trying to figure out what to buy. Look at your options, determine what you like, calculate what you can afford, and then buy it. Don’t spend too much of your brain power trying to buy just the right thing. You can drive yourself nuts if you do. If you get it wrong, it probably will not be a big deal. There are three exceptions to this approach that I want to share with you so that you can be picky about being picky.
1. Quality vs. quantity – you will buy many items in large quantities. Don’t waste too much time picking these items. For example, I run a fair amount and like to drink Gatorade afterwards. Gatorade comes in many types and flavors. I like G2 because it is low calorie, and am not that picky about the flavor. When shopping for Gatorade I buy whatever G2 flavor is on sale. If none of it is on sale, then I buy one of my favorite flavors. Problem solved. Wristwatches are another matter. It is unlikely that you are going to buy multiple watches at the same time. In fact, you will probably only buy a few over your lifetime. In this case, do some research so that you make an informed purchase. I don’t have a lot of money, so really expensive watches are out of the question. I own two watches – one informal, and one formal. I wear a Timex weekender watch that I really like. It costs less than $100. You can change the straps on the watch to match the clothes you are wearing. For work, I wear an Invictus watch. It is stylish and only cost a few hundred dollars. Nothing fancy for me.
2. Premium purchases – you will buy a few things that cost a lot of money. Cars, houses, and college tuition are top of list for me. When spending a lot of money like hundreds of thousands for a house, you should spend a lot of time looking, researching, analyzing, and comparing before making a decision. Work with a good real estate agent who can help find you the right house, at the right price, in the right neighborhood. Some shows on HGTV make it seem like you can find a house quickly. I prefer to take my time and spend a lot of time thinking before buying. Bottom line – you should love the house you buy. If you don’t love it, then hold off until you find one you do. When it comes to cars I never buy the first day I visit a dealer. I don’t want to make an impulse buy. It is an easy mistake to make when buying a car. I prefer to visit multiple dealers, do a lot of research, and spend some time thinking about the purchase. Three car purchases I made were good – the Accord, Tacoma, and my Jeep. The Lexus I bought was a mistake. I should never have spent that much money on a car. Choosing a college is similar – do lots of research to include visiting each school before making a selection. The good news is that researching cars and colleges is much easier these days with all of the online tools. These did not exist back when I was your age.
3. Money makers – you should save and invest some of your money with each paycheck so that you can retire one day. When it comes to investments there are an overwhelming number of options. Be picky about who you allow to invest your money. Many financial institutions will promise high returns and low risk. They use this marketing lingo to justify charging you high fees for managing your money. Don’t fall for it. Every dollar you spend on management fees is one less dollar that gets invested. It is really hard for money managers to “beat the market”, and they know it. I have done a fair amount of research on this topic and decided to keep things simple. I invest in index mutual funds with low management fees. Several reputable companies offer these type nowadays. I would never attempt to invest my own money in individual stocks. It takes time and energy, and expertise that I don’t have.
In most cases I don’t think there is much value in being picky about what you buy. There is a time and place to be picky. I recommend the three listed here. In case you are wondering why we have all of these choices, the video below explains why: