“Return on investment is a performance measure used to evaluate the efficiency of an investment or compare the efficiency of a number of different investments.”

Thanks Investopedia πŸ€“

The concept of ROI is simple –

but it’s really the implications that are fascinating. For example…

β€œI wore this dress once but that’s ok, it only cost me $20.β€πŸ˜…

Compared to…

β€œI wore this dress once and I spent $200.” 😟

It’s so much easier to accept mediocre returns when the initial outlay is small. Hence why you are more likely to impulse purchase clothing & beauty products, then say, a car.

So how can one make better decisions when it comes to maximising ROI, especially for small purchases?

Step 1. Recognise what you are doing

Shopping out of boredom, or just because there’s a sale, or because it looks nice on Instagram or Youtube. I’ve done all of these things, perhaps you have too 🀫

Step 2. When you actually need something…

A. Maximising returns 

Know what to expect before you buy. This could involve trying samples, trials, reading reviews, i.e. doing your research.

B. Minimising investment 

If you want to buy – wait for a sale, find a discount code or a cash back deal, get it second hand.

If you want use – rent clothes, buy the mini size beauty product, borrow from a friend or family member.

Step 3. Compare with alternatives

Typically you’ll have an expensive option, a mid-range option, and the cheap one. But what if we expand our option set by one and add, not buying at all? When the denominator is 0, it may break our calculation, but in the real world, that money stays in your bank account 😊

But if you do want to buy, which option should you go with?

I suggest buying the most expensive option that you can afford.

  • You’ll use the heck out of it
  • You’ll look after it better
  • You won’t feel buyer’s remorse and end up buying both the cheap and the expensive one

An intentionally made decision is most satisfying.

Capsule wardrobe from The Minimalist Wardrobe

Can’t be bothered putting your potential purchase through the test?

Perhaps it’s a sign you don’t need to buy it πŸ˜‰