The Affordability Factor

So you want to buy something and have the money for it, or think you can get it -

But can you afford it?

This may sound a stupid question, but here's how it works:

A business might have the capital or credit to open up in a particular location, but can it afford the outlay if it's planning a gourmet restaurant in an area where most people buy fast food?

Is there a good chance the money invested won't be got back, let alone with dividends? If so, then the business clearly can't afford to open up there.

The affordability factor is something that consumers as well as businesses need to take into account when considering making a purchase.

Affordability is the unseen partner in any buying decision.

It's obviously no big deal in making small, everyday purchases like buying a newspaper or some cake. Then it's just a question of how much change you have in your pocket - not much decision-making needed there. You read the newspaper and eat the cake and the cost of buying them is the extent of what you have already spent to buy them.

But with larger purchases, like a car or a house or a long vacation, the affordability factor simply cannot be ignored.

Into the calculations of the outgoings needed to service the purchase price must go all the costs of running your car: the car insurance and taxes, the gas to keep it running, the maintenance, the repair of small bumps or dinges you won't want to bother your insurance company with, not to mention any parking or other tickets you might find yourself lumbered with, naturally through no fault of your own.

If buying something today has consequences for your spending power tomorrow, affordability  must be considered.

You have a responsibility to yourself to decide whether you can afford this purchase not just today, but for maybe months or years to come.

Many people are taking this responsibility to themselves seriously. Reuters.com reported that in a recent survey conducted for CarMax Inc., 56% of buyers chose affordability as the most important factor in their used car purchase, over the second-highest consideration (quality of the vehicle, 17% of buyers.)