Why Bad Spending Happens to Good People04.12.11
In a consumer-ridden world, spending has become a lifestyle. Impulsive spending has become downright dangerous. We all have things we’ve bought and then regretted, whether clothes, cars, dinners or even homes. It’s not that we don’t care about our financial health. But rather, many seem to want to satisfy emotional and physical desires through spending. Cotton Candy wants to help you identify and then avoid spending habits that can leave your pockets empty. Contributor Ornella Grosz explains why bad spending happens to even the best of people. And don’t worry. She’s got a few simple solutions, too.
No. 1 Illusion of a sale
Beware of department store sales. Sales and clearances are great if you had already budgeted to buy the item before the sale. If you set your shopping budget to $100, and the sale price is $120, then it’s not a sale for you. Whether there’s a sale or not, spend no more than your budget.
No. 2 Pretty lights and display windows
A new car, a bigger home, a new gadget, the latest fashion trends all seem great while in the display case or in the car lot. But these environments distort the image of what you actually need. Buy what you need, not what shines under the store lights.
No. 3 Credit card convenience
It’s convenient to use a credit card simply because there’s no immediate impact on your bank account. However, credit cards can swiftly place you in a mindset of unconscious spending. The best solution is to deduct your credit card purchases from your bank account. This way you will have the funds available to pay off the credit card every month.
No. 4 Impulse buying
Marketers strategically use colors, tactics, and phrases designed to create a sense of urgency to buy products you may not have otherwise considered purchasing. Take more responsibility on when and how you spend your money by recognizing if the item is for a need or if it’s an impulse you were allured to buy by an advertisement.
No. 5 Dining out
The convenience for buying lunch or dinner can cost the average person at least $10 a day. During a course of a month that’s $300. By eating at home more and paring down your dine out meals to three times a week, you will be saving at least $180 every month.
No. 6 Unhealthy addictions
Vices such as smoking – around $5 a pack in Georgia and more than $12 a pack in New York – junk food, and tanning beds are expensive. They are all addictions: tobacco, sugar, and release of endorphins. Add up your total monthly expenditures on your vices. Doing the math may shock you into scaling back.
No. 7 Buying a brand-new car
Who doesn’t love to be first? Although, it’s a great feeling to know you are one of the first owners of a hot new car off the assembly line, wait until the end of the year to consider purchasing a new car. Your dream car will have depreciated in value and price, saving you thousands on the same car.
No. 8 Gym memberships
Gym memberships are often bought in the beginning of the year as a New Year’s resolution. By March or April, less people are committed to attending the gym. Instead of wasting at least $400 a year workout using your own body weight – pushups, crunches, running and lunges.
No. 9 Pet spending
Pets are here to protect us, play with and even reduce the stress in our lives. But you don’t have to buy your pet essentials from pricey boutique pet stores riddled with bejeweled supplies and toys at lavish prices. Instead, buy only a few toys or make your own.
No. 10 Extended warranties
Paying that extra cash for peace of mind could drain your wallet. Ask yourself if the merchandise is likely to break, will cost more than a replacement, or are you paying for double coverage? Buy an extended warranty if the costs of repair are high and the warranty is inexpensive and comprehensive.
Written by: Ornella Grosz
Ornella Grosz is the author of Moneylicious: A Financial Clue for Generation Y