If spending goes beyond your budget, that is an indication that you are not making smart spending decisions. Unless there is a circumstance that bloated your expenses beyond what you were prepared for, there is no excuse for you to spend more than what your budget allows.
According to PlunkettResearch.com, consumers spent an estimate of $5.3 trillion on retail in 2014. This is an increase of 5% compared to the previous year. It is also a huge jump from the $4 trillion spending done in 2009. The factors that are causing consumers to spend more on retail includes a greater confidence in the US economy and of course, the higher employment rate. This make experts believe that 2015 will be a good year for retail companies because consumers are still willing to spend on purchases. In fact, this year is expected to be better than 2014 because of the savings that consumers will get from the very low gasoline prices. Up to $1,500 worth of annual savings can be gained and diverted into other spending needs. Another contributor to this buying confidence is the strengthening value of homes and stock investments – which helps consumers feel more financially rich than before.
However, the same study revealed that although consumers are more willing to spend, they are looking for products that give them the best value for their money. If not fair priced, they want it to be sold at a huge discount.
But despite buying something at a great deal, you still have to exert some caution because preferring to buy a low priced item does not always make you a smart spender. There is more to smart spending than the price.
3 questions to ask to make a smart choice before you spend
There are a couple of spending influences that will affect your behavior when faced with sales, promos and discounts. While we are encouraged to spend below our means, it does not mean we should be careless about it. Not all all low cost purchases will benefit you. Before you buy something from a sale event or a discount store, you need to ask yourself a couple of questions.
Question 1: Do you really need it?
Even if something is being sold at 70% off, that does not make it a smart spending choice. You have to understand that if it will not be used, you did not save 70%. Instead, you just wasted 30% of the regular price. To keep you from getting confused, you need to have a list with you whenever you go on a shopping errand. Be strict about this. If it is not on your list, you should not buy something. Even if you think that it is something that you may have forgotten to include in the list, check if you can wait until your next shopping errand before you purchase it. That should give you some time to think about the necessity of that purchase. If it is something like a new shirt or bag, the waiting game still applies. You may want to check if that sale event will last until the next weekend and just come back for it if you really feel like you need to make this purchase.
This is also true for any deals that you will see in a restaurant. If you did not include eating out that week, then even a 50% off deal can be a burden on your budget. Think carefully if you need that deal or not. That is how you implement smart spending during sale events.
Question 2: How long will this deal be offered?
If not the same deal, check or observe how often a particular establishment offer deals. If it happens almost every month, you may want to enjoy that discount the next time it comes around. Make sure that this time, you will include this purchase in your budget. At least, you can move an expense or earn more to make way for this expense. If you know that it will happen again, you do not have to immediately make a purchase. Besides, waiting for the next deal will give you more time to think about the necessity of that purchase. If after a couple of days the impulse to buy is gone, then you know that you only wanted to buy it because of the discount – and not because you really needed it.
Question 3: Is this expense more important than your saving goal?
Smart spending is involves merely looking at the expense. It is considering the bigger picture that includes your goals – savings and financial. Think about a particular goals and try to weigh which is more important, that expense or your saving goal? If you find yourself hesitating, then that means you need to allot more time before you make a decision.
One way to steer yourself from making a rash decision because of a seemingly good deal is to just stay away from tempting retail stores. If you think that the chances of you buying unnecessary items is higher in a particular store, then do not go there unless there is a need. And when you go there, make sure that you have a list with you. That way, you will come out of the store carrying only what you intended to buy.
According to a study of the National Retail Federation entitled Holiday Consumer Spending Survey, 61.9% of consumers will visit discount stores for their holiday needs. Despite having a lot of choices in terms of stores, consumers choose where they want to buy mostly based on the discount they will get. In the same study that was published on NRF.com, it is noted that 74.7% of respondents said that the price discount is a big factor in helping them make a choice. A convenient location (47.9%), low prices (41.2%) and customer service (30.3%) are the other factors that affect the decision of where to go shopping.
3 techniques when buying groceries
If there is one area in your budget that you really need to practice smart spending, it is while buying your groceries. Admittedly, this is not one of the biggest expense that will eat up your budget. According to the statistics published on FMI.org, the average weekly expense on groceries is $102.87. That means the average monthly expense is $411.48. Although it is not as big as your expenses for your home, for someone who is earning $2,000 or lower, this is still a big amount. If you can control your spending, it will really help you keep your expenses down.
Fortunately, your grocery list is one of the easiest to control and you will realize that there are a lot of saving tips for buying groceries. Here are some of them.
- Shop with a list. We have mentioned this several times already. Not only will it keep you organized, it will also keep you from buying things that you do not really need.
- Schedule your shopping trips properly. This will depend on your specific situation. If the grocery store is far from your place, it might benefit you more if you make less frequent visits and buy in bulk. The latter can help you save more money but beyond that, you can also benefit from saving on gas and also your time. However, if the grocery store is not out of your way, you may want to shop more frequently so you do not waste any of the stocks that you buy.
- Prepare your meals ahead of time. If you are doing your weekly or monthly grocery shopping errand, you may want to plan your meals ahead of time. This will help you create the list that you will use to make smart spending decisions as you do your groceries. Not only that, you may want to plan for leftovers. That will not only help cut down on your cooking time, the elimination of food waste will give your grocery purchase more value.