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Price vs. Value: What drives your purchase decisions?

This work week is shorter than most thanks to Monday’s Labor Day celebration. For most, Labor Day marks the unofficial end of summer and one final pool day before welcoming fall. The actual origin of Labor Day is centuries old, and the holiday was established to pay tribute to the achievements of American workers.

Recognizing hard work is important, and this holiday can be a great opportunity to reflect on the fruits of your labor. You work hard and hopefully earn a fair income by doing so. In turn, your income supports your lifestyle and satisfies your financial responsibilities. For most of us, earned income is one of our greatest assets and therefore we should think critically about how we spend our income to build the life we want. How can you put this into practice? A good starting point is to evaluate what drives your purchase decisions.

"Price is what you pay; value is what you get."

In this quote, Warren Buffet makes an important distinction that most of us have never considered - the difference between price and value. Simply put, price is external and value is internal. Because of this, there is no direct correlation between what you pay and what you get.

Unfortunately, society has led us to believe differently. We are conditioned to make impulsive purchase decisions based on a reduced price, only available for a limited amount of time. This sale-mindset is often ironically referred to as “value” shopping, when in reality this practice breeds very little value.

What if you instead re-framed “value” shopping around what you perceive as valuable? Your personal definition of value is unique and should reflect your priorities. For example, is preserving your time important to you? Then maybe you should consider spending your money on convenience and services that will save you time. Perhaps creating travel memories with your family is very important to you. If so, you should allocate more money to travelling with your loved ones. Maybe you are passionate about cooking. In that case, consider investing in cookware that will elevate your meals and time in the kitchen!

My passion is my horses, so I choose to spend my money on lessons, horse shows and the upkeep that my horses require. I value my horses and my income propels my equestrian goals. What goals does your income support?

Once you define how you wish to spend your money, the rest of your budget will fall into place much easier. Many people associate budgeting with limitation and restriction, but the money you work hard for should not limit you. It should be a resource to set you free to create a life that you love!

Last month we talked about the importance of looking back and identifying your money lens. This month, I am challenging you to turn your focus to the future and make an intentional plan to align your spending with what you truly value.

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