Last week we talked about being too frugal. Yes, it can happen. Most people, however, have the opposite problem: overspending. There's only two things you can do with your money after you pay your taxes: you either spend it or save it. In 2005 our savings rate was actually negative, which means we spent more than we took home after taxes. That means we went into debt.
If there is any silver lining in the recession, it taught a lot of folks to save. At least those that still have a job. So, if you're still lucky enough to have a job, you may find it difficult to save money.
How Can I Save Money?
Despite the fact they tell you not to leave home without it, I would suggest you use cash. First, research shows you'll spend 20% less if you use cash. Also, when you use a credit card you haven't given up anything; you hand your credit card to the clerk, they swipe it and hand it back to you. Furthermore, that allows you to focus on what you're getting, NOT what your losing.
What The Stores Do To You
There are a couple of things the stores do. First, they play loud music. Just as loud music motivates you when you're working out, it will motivate you to spend. Also, if the music is real loud, you cannot think clearly.
Also be aware of clearance sales. They will entice you to buy things you don't need. Keep in mind, if the store is selling these items at below cost prices, no one wanted them. Why should you?
Change Your Shopping Habits
Here are a few things to consider:
- Always shop with a list and stick to it. Don't buy anything not on your list.
- Don't buy in bulk if you can't use it all, or if you'll get tired of it before it's used up. Think: mayonaise jars at Sam's that you normally see in an Elementary School cafeteria. Your savings goes to waste.
- Don't shop if you're on a diet. The diet deprives you; you make up for it by doing a little retail therapy.
What was the last thing you bought that you really didn't need?