Learn to separate wants from needs.
Learn to be cautious when you’re about to spend money.
Companies are constantly trying to erode your ability to say “no”.
Look everywhere to find ways to save money.
Separate wants and needs
We feel needs and wants are binary, but they sit on a spectrum, and civilized people frequently mistake wants as needs:
We often imagine an expensive item is a plausible solution to an unknown need.
Needs often become wants by adding quantity or quality:
- Housing and transportation expenses tend to scale up the most with lifestyle changes.
- A need for rest or relaxation might make us feel like we must pay for it.
- You may need a car, but not a new car.
- You may need a larger place, but don’t need to live in any particular part of town.
- You might need to reward your child, but not necessarily with ice cream or a toy.
Instead of buying a “want” on credit, use a sinking fund:
- Set a fixed amount aside every month for that thing.
- Save until you have enough to buy what you want.
- Buy that thing with cash, at a discount if possible.
Caveat Emptor: Buyer Beware
As the buyer, you’re entirely responsible for your purchase.
Halt impulse purchases by tracking your spending and triggers closely:
- Impulse purchases are the easiest way to ruin a budget.
- Manage your finances on your mobile device to always keep your account balance available.
- If the temptation is too severe, unsubscribe from email lists that give promotions.
- Opt out of browser-based retailer ad tracking at Digital Advertising Alliance.
- Only use sales and promotions to buy what you need.
Never buy what you don’t understand:
For every single dollar you spend on anything substantially valuable, you’ll spend another dollar over its lifetime in maintenance, repairs, or disposal.
Consider the value of an item relative to saving and investing the money across 20 years (which becomes about 5 times the sticker price today).
Not everything you buy will give you the same satisfaction:
- We tend to compare how items will give us happiness when we want to purchase them, but that satisfaction is never worth the trouble we make researching.
- You’ll find much more happiness buying 20 $5 items you like than buying a $100 item.
- Buying things is rarely as rewarding as buying experiences.
Companies assault your ability to say “no”
We tendency to not see money as a “fixed” value:
- Someone will drive across town to save $50 on a $100 radio, but not to save $50 on a $20,000 car.
- We also will use financial comparison to measure the value of items:
- After seeing a $500 bottle of wine, a $50 bottle seems “cheap”.
- After saying “no” to a $200 expense, we’ll see a $20 payment as modest.
- We also imagine drops in price are more value than hikes:
- People are more likely to buy a $500 item that was marked down the previous day from $600 than a $400 item that was raised from $300 the previous day.
- Specific numbers tend to make us think that price was well-researched (e.g., “$13.47”)
Every portion of the marketing/sales experience is designed to subconsciously erode your defenses.
Used items tend to turn far less profit as new ones.
Many companies generate far more profit from the banking products derived off of their product than the product itself!
Watch for marketing tactics designed to make you overspend:
Building rapport through personality:
- 4 out of 5 people who leave to think about their purchase don’t come back.
- When people associate a product to a person, saying “no” feels like damaging a relationship.
Financing and convenient payment plans:
- Store loyalty and rewards cards
- Store debit and credit cards, often upgrades from loyalty cards
- Mobile and advance payment options
Endless, repetitive product positioning and brand recognition create conditioned responses:
- TV, radio, magazines, and internet ads
- Downloadable apps and email lists
- if you know their name, they’re spending a portion of their budget in advertising instead of a superior product.
- Bright colors and attractive images will draw attention, but also take away from their budget for making high-quality items.
- Eye-level items on shelves give the greatest profit margin (some brands pay a premium for it!) while shelves at the top and bottom are lowest.
- Free trials that automatically renew (try to subscribe to them with a depleted gift card).
- Entertainment or a free night at a hotel with a 2-hour presentation (popular with timeshares).
- Free shipping at a minimum purchase amount that requires buying more.
- Buy-one-get-one-free/50%-off/for-$1 sales where the product is more than twice the price as elsewhere.
- Many brand-name coupons only bring their prices down to store-brand alternatives.
In-store additions and features:
- Fantastic deals are often under-stocked, inconveniently located or requires walking past advertising.
- Ignore attention-seeking promotions that aren’t worth your time or money.
Music selection and affiliate marketing:
- We identify upbeat, catchy pop music with shopping.
- Celebrities endorse products because they were paid to recommend it and often don’t believe in or even use them!
Avoid becoming loyal to any particular brand, especially if it’s perishable.
Save on routine purchases
NOTE: do not save money with any of these unless it’s legitimately worth your time, and calculate if you merely have a hobby:
- Calculate how much time it takes to save that money.
- Find out how much money that would be per hour.
- Do it if that wage is worth the frustration.
You can make most household items affordably, from toothpaste to cleaning supplies.
Check gift card balances before using cash:
- People usually forget they have gift cards.
- Keep the balance handy by folding the most recent sales receipt around the card.
- Stores are legally required to give you the cash balance of a card under $10.
- If you don’t like that store, buy another gift card with it from a different store.
Buy in bulk when it’s cheaper:
- Check the unit price because many vendors will charge more per unit for larger containers.
- Check the rate for all non-perishables:
- Canned goods
- Hygiene products
- Office supplies
- Paper products
- Soaps & scents
- Carefully do your math on all perishables to avoid paying more in waste.
- You will spend more money if you’re loitering in a store.
- There are many more fun things to do than hanging out in a mall!
- Use cash instead of plastic to “feel” the money more.
- Ignore how much you’re saving, since 75% off is still costing money.
If you don’t have an emergency, take your time:
- Rushing inhibits the ability to comparison shop.
- Frantic shopping also makes us stress-spend.
Research everything you buy:
- Ask or look for free samples.
- Though cheap is usually good, never buy cheap tools, shoes, office chairs, or paint to stay happy.
- Whenever possible, buy used instead of new.
- Comparison shop to find which stores have the lowest prices.
Time the market to find the best times to buy anything you need:
|Department Store Merchandise||Y|
|Thrift Stores||Y||Y||Y||Y||Y||Y||Show up on the day they restock|
|Yard Sales||Y||Y||Y||Y||Y||After Christmas or springtime (varies by climate)|
|– Baby Clothes||Y||During pregnancy|
|– Kids’ Clothing||Y||Y|
|– Men’s Apparel||Y|
|– Designer Clothing||Y||Y|
|– – Dress Pants||Y|
|– – Lingerie||Y|
|– Winter Wear, Boots & Coats||Y||Y||Y||Y|
|– – Jackets/Outerwear||Y||Y|
|– Athletic Wear||Y|
|– Women’s Handbags||Y|
|– Flip Flops||Y|
|Perfumes & Colognes||Y|
|FOOD & DRINK|
|Groceries||Y||Shortly before closing time|
|– Frozen Foods||Y|
|– Plastic Wrap||Y||Y||Y|
|– Aluminum Foil||Y||Y||Y|
|Chocolates & Candy||Y||Y||Y||After Valentine’s/Halloween/Christmas/Easter|
|New Cars||Y||Y||Y||Y||Y||near the end of a month|
|Accessories & Parts||Y||Y|
|Oil Changes||Early morning|
|Car Wash||First hours before opening|
|Airline Tickets||Y||N||Y||Y||Y||N||BEST: Tuesdays at 3 p.m. 6 weeks before flight|
|Outdoor Gear & Camping Supplies||Y||Y|
|Gym Memberships & Fitness Equipment||Y||Y||January is easiest to negotiate price|
|– Movie Theater||Y||Y||Y||Mornings and afternoons give matinee prices|
|– Broadway Tickets||Y||Y||Y||Y|
|– Bowling||Y||Y||Y||Off-hours specials, usually <10AM or >9PM|
|Toys & Games||Y||Y||Y|
|– Video Games||Y||Y||N|
|– Wedding Dresses||Y|
|– Outdoor Furniture||Y||Y||Y|
|– – Swing Sets||Y|
|Flooring & Carpeting||Y|
|Linens, Bedding, Towels||Y||Y|
|Mattresses & Box Springs||Y|
|– China & Flatware||Y||Y|
|Appliances||Y||Y||Y||Y||Holiday weekends, Black Friday*, Cyber Monday*|
|– Large Appliances||Y||Y||Y|
|HARDWARE & LANDSCAPING|
|Garden Plants & Flowers||Y||Y||Y|
|– Shrubs, Trees, Bulbs||Y||Y||Y|
|Hardware & Tools||Y||Y||Y||Y||Y|
|– Power Tools||Y|
|– Garden Tools||Y|
|– Yard Equipment||Y|
|– – Lawnmowers||Y||Y|
|– Winter Equipment||Y|
|– – Snow Blowers||Y|
|Personal Electronics||Y||Y||Y||Y||Y||Y||Y||Black Friday*, Cyber Monday*|
|– Digital Cameras||Y||Y||Y||Y||Y||Y||Y||Y|
|– Cellphones||Y||Y||Valentine’s Day|
|– Computer Monitors||Y||Y||Y||Y|
|Televisions & Home Theater||Y||Y||Y||Y||Y||Y||Pre-Super Bowl, Black Friday*|
* Most sale days (e.g., Black Friday) can often be worse than a normal shopping day, so do your research.
Live the farmer’s mantra – fix it up, wear it out, make do, or do without:
- Learn to repair things with web searches and sites like Fix-It Club instead of buying replacements.
- Look for replacement parts before replacing the whole item.
- You can usually repair or replace most things.
- Take care of your items with preventative maintenance and gentle use to keep things working longer.
- Use the last bit of everything:
- Leave a shampoo bottle upside down when it’s nearly out.
- Get the last bit of hair conditioner, salad dressing, laundry soap or anything else by adding water.
- Turn yesterday’s fresh food into soup or ground meat.
Avoid small-time expenses like subscriptions:
- Even when a small subscription is $10/month, that becomes $120 a year, and 4 of them is nearly $500/year.
Save on non-routine purchases
Owning something isn’t always better:
- Borrow when you need it once.
- Rent when you need it routinely.
- Buy when you use it so frequently that it’s cheaper than renting.
- You can borrow or rent many things unconventionally:
- Cooking appliances
- Jewelry and clothing
- Heavy equipment and power tools
Wait on anything you want to buy:
- Give yourself at least 24 hours for any buying decision.
- Carefully consider your motives to buy.
- Possessions never give lasting satisfaction.
- Though money can’t buy happiness, it can buy fun!
- Ask how you’ll feel about buying it in a week or month.
Count your money’s opportunity cost:
- Spending money in one place sacrifices your opportunity to spend it elsewhere.
- Calculate how many hours you must work at your job to get it.
- Imagine whether you’d take the the item in one hand or the cash/equivalent in the other.
Delay all large purchases:
- We experience physiological changes while making a significant purchase.
- Wait a week for smaller purchases ($100-300).
- Wait 30 days for significant purchases (over $300)
- We attain financial wellness through consistently telling ourselves “no, not today”.
Research what the marketplace looks like:
- Buy ahead or behind its selling season instead of when you need or want it.
- Use wish list management software like List Ease/Giftster or an online price tracker like camelcamelcamel
- When possible, websearch the product on forums and message boards instead of looking at product reviews, since they usually include important facts that reviews wouldn’t cover.
- Only read 3-star reviews with pros and cons because high reviews are often bought and low reviews are unusual cases.
Save on large purchases
A. Hunt around:
- Comparison shop at multiple venues with the same or similar product.
- Direct importers and distributors may offer the same product at vendor prices.
- Examine off-brand or non-brand versions of the same item.
- Some products require extensive searching, so visit and revisit where you may find it.
B. Buy used whenever possible:
- Buying used is almost always cheaper with almost no loss in value.
- Mistyped or misspelled words often sell for less online (especially sites like eBay) and some services like FatFingers can automate it.
- Use online auctions and classified ads like Craigslist and govdeals.com.
- Find better deals with specific keywords: divorce, wife, husband, new baby, pcs/pieces, health, surgery, moving
- Look for niche sites when you want specific items.
- Travel around:
- Meet with individual sellers on classified ads.
- Visit consignment sales and conventions.
- Search for garage/yard sales and estate sales.
- Go to local flea markets and swap meets.
- Pawn shops sometimes have good deals.
- Attend public auctions and police auctions.
- Check out repo lots and tow yards.
C. Look for discounts or promotions:
D. Use in-store coupons and promotional mailers:
- Wrap the coupons around the store card to never forget them on a shopping trip
- Walmart honors the promo code “walmartwalmartwalmart” online for 10% off
- If you start the checkout process on a website but don’t press the “purchase” button, many online stores will send coupon codes within 7-10 business days to close the sale.
- Make a wedding registry of everything you want to buy, then receive a promotional coupon after the registry period ends.
E. Observe company guarantees to save money later:
- Duracell will replace anything damaged by one of their batteries.
- If a product on Amazon goes down in sale value within 30 days of your purchase, email them and they’ll send you the difference.
- Pay close attention to the return policy and keep the receipt and box for at least that long.
F. Barter and negotiate the price down:
- You can successfully barter for many unconventional things:
- Interest rates on credit cards
- Monthly rent
- Coupon values and discounts
- Damaged goods or open box items
- Medical bills
- College tuition
- Job perks and benefits
- Luxury goods and high-priced items
- Stay honest: always tell the truth
- Ask about military and student discounts, even when it wouldn’t make sense at that location.
- Use the power of the cash they want and don’t have.
- Ask for a discount before committing to buying it.
- Understand and use the power of walking away.
- Master the art of silence.
- Don’t be afraid to tell them their deal isn’t good enough for you.
- Most retailers, especially large companies, will price match competitors.
- Learn the “If I take away…” technique:
- Make an offer on the item with most or all the features.
- Discuss removing features to lower the price until you only have the features you want.
- Beware the “good guy, bad guy” routine with experienced sales staff:
- “I’d love to, but my boss won’t budge from the price. Let me see if I can go talk to him.”
- “He won’t move from that price and told me it’s as low as it can go.”
- “I’ll tell you what, I’ll make you a special deal. How does this offer sound…”
- Close the deal or get a further discount with alternatives to money like your skilled services or products.
- You can even barter with individual sellers by giving an unreasonably low offer with a second or third unrelated email, then sending a reasonable discounted amount with your normal email.
Saving money never stops
Saving money is an art form, and there are many, many other ways to save money.