To Buy, Or Not To Buy?

How To Decide If Something Is Worth Investing In

By Alisa Barcan, Financial Coach and Coaching Revolution Mentor

As a Financial Coach I pride myself on not telling people how to spend their cash but I understand that some financial decisions are harder to make, especially if they involve larger sums of money. This article is intended to offer some guidance to those who want to decide whether something is worth investing in or not. It is not, however, intended for those who wish to invest in shares, property, art, gold, etc. That is not the type of investment I will focus on.

What Counts As An Investment?

Investing, for the purposes of this article, means buying a product or service with the aim of gaining some benefits beyond just consumption. This is an important aspect because it differentiates between an investment and a purchase. Buying a book and reading (consuming) it is just a purchase. It only becomes an investment once we start applying the principles in the book and see (or don’t see) their effects.

Food, clothes, accessories, vehicles, household bills and trips/holidays are generally purchases. This is because they are either consumed immediately or they depreciate in value with time.

Books, courses, training, educational programmes, professional qualifications, coaching, mentoring and similar products/services have the potential to be investments. They are not investments per se because they require action beyond consumption and that is up to the recipient.

For the purposes of this article, I will refer to a course as an example of a potential investment and discuss how to decide if it’s worth investing in. 

Monetary -v- Non-Monetary Investment

Firstly though, it is important to differentiate between the monetary aspect of the investment and the non-monetary one. When you buy a course you pay a sum of money but if you want to go beyond consumption, if you want this course to be an investment and not just a purchase, you would also invest time and effort and apply what you’ve learned. In one word I would call this commitment.

The evaluation of whether the course is worth the investment or not can therefore be split into two parts: evaluating the purchase and evaluating your commitment.

In order to evaluate the purchase, I suggest using what is called the 3 E’s principle of value for money: Economy, Efficiency and Effectiveness. If I am your coach or mentor or if you’ve worked with me in a different capacity, then you would have heard me talk about this all the time so I’ll keep it brief.

3 E’s Of Value For Money

Economy: doing things for the right price. Is the price justified given the demand for the subject, how specialised the knowledge is, the recognition it has on the market, how much similar courses cost, the price of alternatives and substitutes on the market, etc.?

Efficiency: doing things right. What are the outputs of this course in terms of curriculum? Is it comprehensive, does it cover topics in enough detail, does it touch on new developments in the field? Who teaches/offers it and what are their credentials? Are they a recognised authority in the field, what is their track record of success in this particular area, do you trust them?

Effectiveness: doing the right things. Is this course the right one for you and the skill gap you are trying to bridge? Does it serve your purpose? What do other people say about it, what was their experience?

You might need to do some research, ask a few questions and read some reviews before you can complete this analysis. If the course passes the 3 E’s test, then it has the potential to become an investment. Whether it becomes one or remains a purchase is up to you.

Commitment

Commitment: am I able and willing to do it? This is the final phase of the evaluation and it is your commitment which will ‘make or break’ the investment. Buying a course is not enough in order to get the results you expect. The course might give you the knowledge and techniques you need but if you don’t apply them you won’t get results.

Therefore, ask yourself the following questions: How long will it take me to go through the entire course? How long will it take to apply the principles? Can I and am I willing to find this time? Does this mean I need to give up some of the activities I am doing now? What obstacles can I foresee and how will I overcome them? What type of support is available to me as part of the course? Am I willing to consistently apply the knowledge I gained until I see results? Am I willing to adapt my course of action and try again if I don’t see results after x months?

Summary

Remember, if the course is worth the purchase then it is very likely that it is worth the investment but it’s up to you to make that happen. A course worth the purchase will promise to teach you how to do x, y and z and deliver on all that but that’s as far as it will go. The application and action taking is where you come in if you want to see results. Are you committed to make it happen?

If you are, and you’d like some help, why not start by having a chat with us? This is a link to our diary.