How a List Can Save You Big Dollars

One of the reasons why many people wind up spending more than they make is that they do not keep track of their expenditures, especially the small purchases. But these seemingly insignificant purchases add up to big dollars. Many of them are impulse purchases which, if one is not disciplined, will leave you susceptible to retailers efforts to put these impulse items in front of you at the check-out counter.

Research shows that more than half of all grocery purchases are unplanned, impulse purchases. That's why people who compile a grocery list and stick to it will spend far less than those who go to a grocery store without a list. 'Spur of the moment' purchases tend to be more expensive and is based on what someone wants at that time, rather than what someone really needs (that is on their grocery list).

Last year, a Toronto Star columnist decided to find out why she couldn't save any money. She tracked every single transaction and expenditure for a month and then reviewed where the seepage from her purse occurred. She was shocked to find that every time she went to the drug store, she would walk out with a basket full of small purchases, e.g. a bottle of nail polish,some bath salts, a magazine etc. These added up to well over $200 per month, or almost $2,500 per year. Women also tend to go on fashion shopping trips, often with nothing specific in mind.

Men are not immune to this, as they are extremely susceptible to electronics, hardware and sports stores. Even worse is that men have been known to purchase cars on an impulse! Research shows that almost half of hardware store purchases are spur of the moment purchases.

Despite the tough economic times, there are so many sales and promotions that present temptations to potentially overspend. So as you go and do your shopping, prepare a list and stick to it. It'll save you dollars when you need it most.

Save Dollars by Not Making the Unnecessary Necessary

I was reading a motoring magazine article recently which was reviewing a new 'luxury' vehicle when it struck me how companies have long made extra sales and profits by making the unnecessary seem like a necessity. There are cars that can now parallel park themselves, ones with rear-end cameras, computer controller displays in the dash etc. It appears that the public has bought into gadgets that were once considered luxuries such as automatic transmission, power windows and door locks, to be considered as essentials. The American auto industry is in trouble partly because it spent so much of its time (and money) putting in fancy gadgets in their cars at the expense of build quality and reliability. Even in the 80's, American car manufacturers would put in digital dash boards, and power everything from doors, windows, seats and seat belts. Unfortunately, the public bought it and paid dearly for it.

So instead of buying an item because you NEEDED to replace it, people were buying things because they wanted to replace it. Advertising, peer pressure or design were all instigators to wrestle money from consumers' pockets. Heck, even my elderly parents wanted a new flat-screen LCD Television when their old CRT set was still in perfect working order. I guarantee that with their eyesight being the way it is, they could probably not tell the difference between the new and old TV set.

Not only is this type of expense a drain on one's bank account, the frivolous waste brought on by rampant consumerism has been extremely bad for the environment. Tens of millions of old CRT televisions and computer monitors are being thrown away annually, and finding themselves in landfills in poor countries used as dumping grounds and whose populations`health is now being adversely affected.

Many new technologies such as MP3 players are designed with a limited lifespan, so that if it breaks down, it is usually cheaper for one to buy a new one that to repair their old one. Read Internet forums on iPods and you will find consensus that their batteries don`t last longer than a couple of years, whereupon they will more likely be discarded and a newer version purchased. Longevity is no longer important to many companies because longevity no longer produces continual sales. Cellphones come upon with new `must-have`or `necessary`features that render perfectly good phones obsolete in their owners`eyes.

If you want to save money, assess what your real needs are, ignore the advertising, peer pressure anfd hype and buy what most closely fits your needs, not your wants.

A Good Time to Re-evaluate Your Actual Needs

If there is a silver lining to this economic downturn, it is that financial hardship has forced people to re-evaluate exactly what their actual needs are. In better times, we often buy things with grand expectations that never materialize and these items wind up being seldom used. A prime example is the trend of families having a 'great room' or family room that turned the traditionally well-used living room into a more formal (and seldom used) living room.

Many people will spend unnecessary dollars buying big ticket items that will either gather dust or stay in their packaging - from electronics to kitchen gadgets, to clothing and shoes. Now, when people are forced to liquidate any asset possible to raise cash, or when their bank has foreclosed on their home and they need to move, then they understand how much money was spent on things that they thought they needed, but realize they merely wanted.

In my first home, I had managed to secure an old nine-foot boardroom table that could seat 18 people for dinner comfortably. I think that I had used it for that specific purpose twice, otherwise it was an unnecessary piece of furniture taking up valuable real estate. An uncle spent thousands on an authentic English pub which wound up gathering dust as his friends and relatives wound up being too busy or tired to hang out in his 'bar'. As I ponder a move onto a boat, I suddenly become aware that I seldom use much of the space in my spacious condo. I hardly use my formal dining room table, preferring to eat in my kitchen; I sit in the same place on the sofa all the time (meaning I don't need a huge sofa but a smaller love seat or a single armchair instead). I am currently purging my condo of all things that I think are now unnecessary (to sell at a yard sale), and as someone who considers himself as living 'lean', I am still surprised at how much stuff I have that I either have not used in a long time, or used at all since I purchased it.

Still, there are limitations to living small. My six-foot tall brother-in-law believes that he could live aboard his 20-foot sailboat, while I don't think my five foot four inch frame would be happy in anything smaller than a 26 foot power boat. I still fear claustrophobia in to small a space, but believe that I can definitely live in smaller living quarters than I currently inhabit. Technology has rendered many things superfluous, and allows one to make better use of space and resources. All my CDs are now on my iPod, all my financial statements are online, all my photos on memory cards or on online storage sites. The good thing is that I become more and more comfortable with the direction that I am headed which is living simpler than I already do.

Unshackling the Chains That Make You a Slave to Fashion

I've been away from the work world for about nine months now, and during summer in Toronto, the weather is warm on most days, and some days, downright hot and muggy. So, I've been living quite comfortably in my current wardrobe of choice - a pair of shorts and a loose T-shirt. On cooler days, I may wear the occasional pair of jeans and a sweater.

This is a very different wardrobe from my work attire which normally consists of a suit and tie, or at minimum, a long-sleeved dress shirt and pair of slacks. On very important meetings and events, shirts with double cuffs and cuff links were necessities. Since being off work, I noticed that my expenses related to dressing for work have almost disappeared. My dry cleaning bills are few and far between, I don't need to do as many loads of laundry, and my shopping for work clothes has, understandably, stopped. This got me to thinking that how costly it can be to dress for success, but how it can be minimized. Admittedly, women have it harder than men - their fashions change far more frequently, they are under greater scrutiny from their colleagues (and mostly, other women), they are exposed to more advertising on TV, magazines and billboards. Add to that, shopping - for many women - serves as a leisurely past time, if not a sport. Men, on the other hand, can get away with having a few suits, a few crisp dress shirts, a selection of ties and a nice looking pair of shoes.

Nevertheless, women tend to also make their own situation worse by following fashion a bit too much. Being a slave to fashion is both costly, impractical and ultimately futile. Firstly, many of the hip and trendy fashions (especially women's) may only last a season, therefore the items they purchase has a very limited shelf life, and becomes destined to the Goodwill bag relatively quickly. Secondly, many people purchase clothes but never wear them (hands up to any woman who has never bought an item that wound up unused in her closet with the tag still on it?). Thirdly, very few people are trendsetters, and by the time the fashion trend hits the streets and is marketed to the masses, it has already started to lose its cachet, soon to be replaced by a new style.

So, you might ask, what's the solution? If you want to maximize your fashion dollars, start listening to fashion experts who will tell you that the best way to assemble a wardrobe is to start with the classic pieces that will never go out of fashion. For both sexes, it may be a plain dark blazer or suit (you can never go wrong with black or navy blue), a classic white shirt or blouse (forget the frills, pleats or puffs), pair of black pants or slacks, plain coat, dark pair of jeans, and a nice pair of leather shoes. For women, add a classic cocktail dress (the little black dress never goes out of fashion) and a plain skirt.

I have a weakness for nice suits, but instead of buying 20 suits in a variety of different colours and patterns, I own 5 great quality, all wool suits in navy, black, grey, charcoal and light beige (mainly for summer) that will hold me in good stead at any occasion. I buy only single breasted suits, as it makes my appearance slimmer and is not as formal or as old-fashioned as the double-breasted variety. If you're tight for cash, my advice is to buy one or two more expensive suits rather than three or four cheaper suits. Why? Because they are more likely to be better constructed, provide a better fit and last longer than a cheap suit. So, if you buy a classic, single breasted, three-button navy blue or black suit, it will never go out of fashion, and becomes the foundation of your wardrobe. Want to be a bit more casual? Pair the jacket with a casual shirt and pants. Want to remain fashionable - buy a skinny tie that is currently in vogue. The key is to invest in a few good pieces, and supplementing them where necessary rather than wasting money by slavishly trying to follow trends.

For women, it may be a bit more difficult, and my advice is to invest in the staple items mentioned above, and complement it with fashionable scarves and other accessories. If you were really feeling the peer pressure, buy a cheaper brand of that fashion style, so that you don't throw money away on something that you'll have to wait 20 years for it to come back into fashion. Example, there are hundreds of thousands of women that spent hundreds of dollars buying 'Uggs' branded boots, that are now gathering dust in a closet somewhere in their homes. Every year, men and women have a ritual of cleaning out their closets, looking embarrassingly at clothes that are no longer in style, and placing them in a garbage bag that will be dropped off at their local Goodwill or Salvation Army thrift store.

So, save money by unshackling the chains that make you a slave to fashion. And by the way, I do clean up nicely when I go out.

This Month's Quote

"Lives based on having are less free than lives based on doing or being" - William James