Articles and blogs about saving money like to point out ways we "waste money." Money is only wasted when you don't make a conscious decision to spend it. Everything else is about getting value for your money. Maybe a pair of jeans really is worth $200 to you? The problem is that value is such a subjective concept, it's kind of hard to blog about, so it doesn't get much digital ink.

How do you decide value? Well, it's really an art form, there aren't really set rules.

Comparison Shopping

First things first - compare to other options. This is the basic shopping around approach. If you can buy the exact same product through a different retailer, and the price is lower, then all else being equal the more expensive one is poor value. But other things are rarely equal. The cheaper store may be further away, thus requiring extra investment of time and fuel to get the discount. In some cases, you may place higher value on supporting local business, so you're willing to pay more knowing that the staff are higher paid and the profit will stay in your community. You may have ethical issues with how the prices are lowered in the cheaper stores - I refuse to shop at Walmart because of how their treat their employees and suppliers. It's hard to put a dollar value on these things, but they are important factors in getting value for your money.

Quality

Then there's quality questions. I'm currently looking into an all-inclusive vacation for my upcoming honeymoon. It'll be the first one I've ever taken, so I'm spending a lot of time determining what's worth paying for and what's really important to me. The cheapest options are in Cancun or Varadero, both massively built up resort areas where I'd be unlikely to see a local person who is not employed by the hotel. But smaller resort areas - where there are maybe a half dozen hotels at most - are only a couple hundred dollars more, which is probably worth it to me. Likewise, I'm willing to pay more for adult-only, smaller number of rooms, and good snorkeling access. All of these things increase the quality of the product, and so are worth extra money.

With physical purchases, quality is often less subjective. A department store bike sold for $100-$300 won't stand up to the amount of riding a $800 bike will. If you ride regularly, it's likely the department store bike will have to be replaced every year or two, whereas the expensive bike should last a decade or more. This makes the direct financial cost of a cheap bike higher than an expensive bike, so long as you're going to use it. The same thing comes into play when buying computers, power tools or clothing - going cheap now usually means having to replace it sooner. Even food...it costs more to shop at the farmers market, but fresh produce picked ripe tastes better than commercial produce picked 2 weeks ago and shipped. That's worth something.

Where it fits

What's this purchase going to do for you. This is the biggest, and most subjective value calculation. If you're buying something that you're going to use a lot for years to come, spending thousands of dollars isn't unreasonable. But if you're replacing say, an old car, the calculation isn't so clear. What do you get out of buying the new car? Is what you get worth the price you're paying?

I can't make that decision for you, and neither should any other blogger. The end message of this post is that to make the decision, don't just spend the money blindly.