When is something you buy worth the money?

If you’ve ever gotten into a conversation with friends about whether a product is worth the money, you’d often notice wildly varying opinions. That’s because worth is very subjective.

Is this worth the money? A decision-making framework

I use a point system to determine (expensive and material) purchases where I split my decision-making across 4 variables:

0. Opportunity Cost: What does this come at the cost of? Am I spending money that should be used elsewhere? Will I have to take a loan for it? This is where I begin. If the answer is yes, I should be investing that money somewhere else or saving some more before spending on that particular item; my decision is already made for me – it’s not worth it. I hate debt as well, so if it’s an item that involves a loan or a credit card EMI, I will wait until I amass the necessary amount.

1. Utility: Is this an item that I will use regularly?
   Mark on a scale of 1 to 10, where 1 is probably once a year and 10 is almost every day.
   
2. Longevity: Is this an item that will last me till the end of time (or at least three years?)
   Mark on a scale of 1 to 10, where 1 is in the days and 10 is in the years.
   
3. Happiness: This is where things get subjective. Will this item bring me joy?
   Mark on a scale of 1 to 10, where 1 is meh and 10 is unbridled joy.

How to score

A good way to use this system is to ensure that what you lust after scores at least 5 on these three criteria at a reasonable opportunity cost. If something gives you 10 in happiness but scores only 1 or 2 points in utility and longevity for example, it should be avoided.

If something scores highly on all three parameters but comes at a huge opportunity cost – the item is likely worth the money, however, you probably can’t afford it yet.

Similarly, if something scores only 1 in happiness even if it does well in utility and longevity, you should avoid it. It might be useful and last a long time, but if you’re not happy with it, then you’re not going to use it. Trust me on this.

Obviously there will be exceptions. But by and large, I’ve found that every time I get swayed by marketing material, this framework brings me back to the ground.

Never Forget

Ultimately, worth is incredibly subjective. I pay for many things that people around me may find hard to see value in. So if you’ve decided something was worth the money – in whatever way – never feel the need to justify it or overexplain things. It doesn’t matter.

Other people don’t get to decide what’s worth your money. You do.