Great Savings 8 – Limit Unconscious Spending

 

A wad of receipts.

The real cost of unconscious spending may be higher than you think.

Unconscious spending is another way to describe buying products or services without a real plan. In a perfect world, we would all have enough money to buy whatever we wanted—anytime it pleased us. In the real world, most everyone lives on limited means and that has an important implication: If you want to get ahead, pay off debt, save for college or retirement then you need a plan. A good financial plan has a lot of different elements, but the one we’ll focus on today is the way we go about shopping.

 

Let’s take an example: Say we go to the mall on a whim and buy a cool pair of jeans that just happen to appeal to us. They cost $40. Now, say we hit the grocery store and buy a few extra pounds of chicken just because it was on sale. The unplanned cost is $15. Then we walk out of the store and are surrounded by a bunch of cute little munchkins selling Girl Scout cookies. We can’t risk disappointing them. The extra cost is $4. After all the shopping today, we’re pooped. We decide to order some pizza and accompanying goodies for dinner. The added cost for the family meal is $35.

 

A shopping center.

Sometimes shopping is just too convenient. We end up spending far more than we intended.

Do you see how this works? Each unconscious decision to spend dipped a little deeper into our wallet. In just one day, we spent ($40 + $15 + $4 + $35 or) $94 total we weren’t planning on spending. Even if we’re really good on most days and only overspend this much over the course of a month, in a year it would add up to (12 x $94 or) $1128. And in ten years that’s $11,280!

 

Great Savings Tip #8 is to limit unconscious spending.The thing is most unconscious spending only amounts to adding a few extra dollars or cents here or there, but it all adds up. In fact, in the end it can cost us tens or even hundreds of thousands of dollars over a lifetime. This is one of the secrets to understand about getting rich: Unless you’re extremely lucky or gifted, most people accumulate wealth by carefully watching the way they spend over a long stretch of time. In a sense, you can say they’re making money by not spending it or at least not spending as much of it.

 

 

5 Tips You Can Use To Become A Smart And Savvy Shopper

 

Turn the other way when you see a vending machine - don't be tempted!

Here's a way to spend a few dollars, unconsciously. Hmm...think I'll have a candy bar.

When we go out shopping unprepared, the odds are good to excellent we’ll end up spending far more than we intended. That’s why the best long term strategy is to become smart and savvy shopper. How? Start by taking these five simple steps:

 

(1) Watch out for the tricks stores use to take your money. Big colorful displays, free foods, specials, and so on are all designed to get you to part with more of your money than you originally intended. For more on this topic click here.

 

My bank account is shrinking all the time.

A good list helps keep money in the old bank account.

(2) Always shop with a list and stick to it. Treat your list like its gold—it is! Over time, by sticking to a list you can save thousands in unplanned and unnecessary purchases. For 6 ideas to be a more effective grocery shopper click here.

 

(3) Make a monthly budget and stick to it. Are you budgeting for food and clothing and the other items you shop for? If not, how do you know if you’ll end up with enough money in the bank at the end of the month to pay the rest of your bills? Potentially more important, how do you know whether you’ll have anything leftover for savings? Set firm goals for spending and saving and then make them a reality. If you’re trying to decide how much to save click here.

 

(4) Don’t bring credit cards when you go shopping—the temptation to use them is just too great. We wrote a whole post on this topic which you may want to read (click here). However, the bottom line is you’ll spend far more over time using credit or even debit cards than if you use cash.

 

Stopping in for a cup of Joe.

It's so easy to be tempted. I'm pooped. A cup of coffee sounds really good.

(5) Avoid shopping when you’re depressed or hungry. Many of us use buying as a means to fill an empty tummy or an unsatisfied emotional need. It never works the way we want it to—and the problem is we end up spending far more than we intended. Eat before you go shopping, and if you’re sad, angry or otherwise emotional, then spend some quality time talking to a friend instead.

 

Action Item: The next time you go out shopping make a list and see if you can stick to it. And while you’re at, look for at least 3 ways the store is trying to get you to spend more than you intended. Get smart! Be a savvy shopper.

 

For a hundred ways to save money see our Great Savings Tip page.

 

One Response to Great Savings 8 – Limit Unconscious Spending

  • connie says:

    if we think we “need” something, or even if we “want’ it, we tend to wait at least two months maybe longer before going ahead. Usually, when a couple of months have elapsed, we find that there was really no reason to get the item.

    Very few people seem to be able to determine the difference between “needs” and “wants”, and the “wants” tend to be very things that get them in trouble.

    Another practice that we observe is: do not buy it unless you have cash, OR if a credit card must be used, pay it off monthly. Never carry a balance

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