In the current economic climate, many of us are looking for ways to cut back on our spending. But the more time and sacrifice a savings plan requires, the less likely we are to stick with it. Budgets that force us to track every dime spent or give up our favorite luxuries are soon abandoned.
Simple strategies that really can trim your spending…
Make your spending mantra “a penny saved is 1.3 to 2 pennies earned.” Ben Franklin’s famous saying “A penny saved is a penny earned” is out-of-date. When today’s taxes are taken into account, you actually must earn between 1.3 and 2 pennies, depending on your tax bracket, to be able to spend one penny. That means you would have to earn as much as $20 to buy an item with a $10 price tag and $200 to afford a $100 gadget. Next time you pick up something in the store, figure out this extra cost and ask yourself if you still want it.Try not to spend a single cent for one week. Eat the food that is in your freezer or in cans at the back of your cupboard… carpool or ride your bike to work to avoid buying gas… play cards or take a walk rather than pay for entertainment. Do this occasionally, and you can permanently reshape your ideas about which expenses are really necessary.Have buyer’s remorse before you buy. The typical shopper comes to regret more than half of his/her discretionary purchases. Think how great it would be to get back your money for everything that you have bought but rarely use. You can’t do that, but you can avoid similar wasteful spending in the future. To do this…Impose a mandatory one-week waiting period before making any discretionary purchase that costs more than $10.Carry an index card in your wallet listing your dumbest purchases, and force yourself to read it before buying anything new.Reevaluate purchases within the retailer’s return period. Return items for refunds if you are not certain that the money was well spent.Make buying difficult. The best way to do this is to pay cash for everything. Handing over a credit card makes it too easy to spend without thinking. Take your credit cards out of your wallet, put your checkbook in a drawer and carry around only a limited amount of cash.Also, when you shop, go with frugal friends or relatives, not free spenders. Appoint a “designated cheapskate” when you are out shopping — just as you would a “designated driver” when you’re out partying.
Haggle over prices. Most Americans don’t like to haggle — it makes us uncomfortable to ask for special treatment. But retailers often are willing to negotiate. This includes not just owner-operated stores but even large chains, where department managers often are empowered to be flexible with prices. Haggling can cut household expenses by 5% to 10%.Example: Last fall, I mentioned to the manager of my local Wal-Mart’s garden department that the garden season would be over soon and that his department would be closed until spring. Would he give me a good deal if I purchased several of his remaining bonsai plants? The manager said that if I purchased one of the plants at full price, he would give me the remaining 11 for nothing. I got a great deal and an early jump on my holiday shopping.
Smart haggling strategies…
Be friendly and polite, not argumentative. People are more likely to give you a good deal if they like you.Don’t be the first to mention a specific price. You run the risk of selling yourself short by offering too much. Let the other person go first.Negotiate on Fridays (particularly Fridays before three-day weekends). Most people are in a good mood on Fridays, and salespeople are anxious to close sales at the end of the week — and in particular, at the end of the month.Don’t sweat the small stuff. Many people try to save by eliminating the small, daily expenses that add up over time. Unfortunately, people inclined to spend money on daily luxuries tend not to give up these treats easily. In fact, if they skip their $3 morning cup of coffee, they usually waste that $3 on something else later in the day.Big expenses are easier opportunities for saving than are small, everyday purchases.
Example: High-end vehicles are huge money-wasters. Cars lose value every day that we own them — and the more expensive the car, the greater the loss. Purchase a reliable, affordable used vehicle, then take care of it and drive it as long as it runs.
Volunteer at a homeless shelter. This is a wonderful reminder of how much you really have.
