The Four-Way Test is a moral code popularized and used by members of Rotary International, a global service organization of business and professional leaders.
It asks 4 questions. Namely:
- Is it the truth?
- Is it fair to all concerned?
- Will it build goodwill and better friendships?
- Will it be beneficial to all concerned?
Inspired by this, my friend and work colleague, Alvin Tabañag, created The Four-Way Test of Spending.
This test, on the other hand, can be used by anyone who wants to reduce their expenses and save money by avoiding impulse purchases and unnecessary spending.
The Four-Way Test of Spending
1. Do I really need it?
What’s the motivation or reason for the purchase? Are you just trying to keep up with the Joneses? Or maybe you’re just trying to avoid FOMO or the feeling of missing out on a trend.
Moreover, if you’re doing retail therapy, then remember that there are other ways to cope with what you’re feeling. So, save your money instead and try those alternatives.
2. Do I need it now?
Is this urgent? What would happen if you don’t buy it today?
Often, desires or cravings go away after a few days or weeks. What you thought to be a “must-have” can become a simple “nice-to-have” or maybe even a “never-mind” if you give yourself time to think about the item.
Furthermore, check if the item or the store would go on sale soon, so you can buy it a discounted price.
3. Is there a substitute or can I borrow it?
What are your alternatives? Perhaps there’s a more affordable substitute that can be as effective in utility. It’s also important to consider other brands and other models of the item.
Moreover, ask yourself how often you’ll need the item. If you’re going to use it only once or twice, then maybe you can just borrow one from a friend.
4. Have I found the best value for my money?
In other words, have you already asked around? Is this the best deal available? Perhaps it’s at a lower price in another store? Or maybe it’s cheaper to buy it online? Don’t forget to check.
Impulse purchases are emotional purchases. Taking a pause to ask these questions allows your mind to focus and think logically, especially if you’re buying a non-essential item that costs a lot of money.
Hopefully, this test improves your budget management and helps you avoid buyer’s remorse.
What to do next: Click here to subscribe to our FREE newsletter.