The Best Piece of Money Advice From The Financial Diet

Hint: it's a simple calculation for the things you buy.

Chelsea Fagan is a personal finance writer and the CEO and founder of The Financial Diet, a media company focused on helping women learn how to manage their money. Fagan is often asked to reveal her No. 1 money tip. She notes that it can be difficult to name one piece of advice that everyone can follow, but this tip can be used by just about anyone: analyzing cost-per-use for any given purchase.

How do you calculate cost-per-use?

Calculating cost-per-use is easy. Fagan uses the example of spending $30 for cheaply made shoes vs. spending $200 for a higher-quality pair. If you can only wear the $30 shoes 20 times before they fall apart, your cost-per-use is $1.50. But if you can wear the $200 pair three times per week every spring and summer for five years, you're looking at 360 uses. And at $200 divided by 360 uses, the cost-per-use for the pricier shoes works out to about $0.55. Quite a difference!

How do you become more intentional with your money?

I have definitely been guilty of buying things without thinking about them too deeply first. But stopping to consider this math before I make a purchase keeps me from dinging my bank account.

Spending more on a purchase you'll use more often and for longer empowers you to buy a higher-quality version of it. There are a few categories of purchases, such as electronics and furniture, where this model can really work out well.

Fagan also notes that a major key to getting the most use and the most value out of the things you buy (especially big-ticket, expensive items) is to take care of them. I have long been a believer in this, and I would rather keep and care for, say, a smartphone, for three years or more than rush out every year to buy the latest model.

And you don't have to obsessively track your use of an item, but it is something to think about. If you make an expensive purchase and then end up not using it as much as you thought you would, you can remember this for the next time you want to buy something similar.

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How can you apply this advice to your own spending?

Fagan's advice doesn't really translate to one-time-use items. But it's great advice for larger and more expensive purchases, and a good thing to keep in mind if you're trying to break bad spending habits. Here are a few examples of where I apply this kind of cost analysis for my own purchases:

• Bed sheets: I have high standards when it comes to bedding, and I always buy 100% cotton sheets. For a queen-size bed, they cost about twice as much as those made from other materials. But they last for years longer and wash beautifully. For several years' worth of good night's sleep, they're worth it.
• Pet furniture: It's no secret my cats are spoiled, but buying higher-quality furniture for them is a smart financial move for me. Cat trees and other pieces that can withstand heavy daily use and also being disassembled and reassembled cost more, but the price is justified because I don't have to replace them as often.
• Cookware: If you like to cook as much as I do, you'll understand why I spend more for high-quality cookware. I have some pots and pans that have lasted for 10 years and counting, and I use them just about every day. They've been an investment in future delicious meals.

As Chelsea Fagan says, "Ultimately, no one can tell you what purchases are and aren't worth it in an abstract sense. All you can really use to judge your spending habits is how valuable a given purchase is to you." Try applying this tip to your own life, and really consider the cost of a purchase based on use before you open your wallet.