Smart Spending

Posted by Julian Ramirez :: August 7, 2007 @ 1:52 pm

After you read enough personal finance posts, one of their main themes starts to become apparent. Personal finance is all about frugality: identifying and removing unneeded expenditures from your life. You can learn how to make your own bread so that you don't have to buy it, how to maximize your fuel economy by accelerating slowly onto the highway, or how to pay off your debts in the most efficient order possible.

With all the excessive aspects of my everyday living brought to my attention through finance articles, it can get very loud in my head as my brain tries to optimize my finances. If I eat out, I think about how much I could have saved if I had made the meal at home instead. But then, when making a meal at home, I think about how much I could have saved on groceries if I had gone to the farmer's market or done some coupon clipping in the newspaper.

Then I remember I should only buy generic store brands. Why am I even buying produce? I should grow it myself. I like eggs... I should get a chicken.

*STOP!* I live in the city, so raising a chicken is not an option. The bottom line is there will always be a new way to save a buck, but there is a point for everyone that balances convenience with price.

Is consumer culture in our world out of control? Yes.

Is the $1,200 moisturizing lotion made from Dead Sea salts really going to make you look 10 years younger? No, sorry.

Will people really find you more charismatic in a $200 designer shirt versus the $20 no-name special? Unfortunately, no.

When you pull up in the deluxe edition of a new car are you going to be $12,000 more impressive than the person next to you in the standard model? Nope.

Think that fancy new PDA is going to take everyone’s breath away when you whip it out? Again, sorry but the answer is no.

Are we still going to pine for some material trinket in the next year? Yes, I'd bet my life on it.

The best way to improve your quality of life is to recognize the important things and separate them from what companies and advertisements tell you is important. Changing your shopping habits from excessive to frugal will certainly help you save money and get out of debt. However, don’t go so far that you push yourself to the point of being cheap and paranoid about your finances.

Take a look at your spending habits to identify your major spending categories. See how they line up with your personal priorities. Try guessing the percentage of your total budget for each category before you calculate it all. How accurate were you? If you were off by a lot, maybe you should try to reign in your spending.

Break your spending into two categories: routine purchases and impulse buys. Routine purchases are things like food, cosmetics, and gas. These are categories worth researching to find the best deals. Amazon.com and Safeway.com both offer grocery delivery services that might help you save money on food. eBay has amazing, jaw-dropping discounts on cosmetic supplies, while gasbuddy.com can help you find the cheapest gas around.

Whenever you come across an impulse buy in a store, wait 10 seconds and see if buying it would really make you happy or if you only want it for some unidentifiable desire. Is it just another thing you didn't know you just had to have? For larger purchase items, always check online to compare prices. There are deals online for everything, and paying full price for anything nowadays is just so old-fashioned. When you buy, just make sure it’s something that you want, and not something you've only been told you do. If it’s something you do want, you can always get a P2P loan on Lending Club!