The Lost Art of Spending Money Wisely

We live in a world where instant gratification and overspending are promoted, not discouraged.  As we approach Christmas, there will be news reports about how much the average American family spends on Christmas presents.  Investopedia reported the projection for holiday spending for the average family in 2021 would be $998.00. (1)  Gallup estimated the 2021 spend on Christmas gifts as $ 886. (2)  The airwaves are filled with commercials urging consumers to buy gifts in December.  Who are the most frequent ones you see?  Car companies, jewelers and perfume ads.  You cannot buy a lot of those for $886.00!  People have forgotten how to spend money wisely.

  1. Make a list of who gets presents.  Set a dollar budget for each person.  As Americans, we are very good at impulse shopping.  We often see something a person “would love” and buy it (on credit) without thinking twice about the price.  It makes more sense to set a budget for each person, rolling it up into one number and budgeting to cover that expense from your cash flow.
  2. Seal each receipt into a small envelope.  Suppose the recipient doesn’t like the gift?  Suppose the garment does nor fit?  You might not want to include the receipt because it puts a price tag on how you value the relationship.  They might have problems returning the gift without proof of purchase.  Let them know the purchase receipt is in the sealed envelope. If they like the gift, the envelope is never opened.
  3. Check the rules on gift cards before buying them.   Gift cards to a person’s favorite store can be a popular and easy gift to purchase.  If the recipient does not use them for a significant period of time they might discover the value of the card is greatly diminished.  This can happen because of inactivity fees and other reasons.  The FDIC has rules.  So do many states. (3)  Read the terms and conditions associated with the card.  Better still, give cash in a gift envelope designed for that purpose.
  4. Try to run your personal life on a cash basis.  Credit cards grew in popularity starting in the 1970’s.  According to US News and World Report 16% of families had a card in 1970.  In 1998 the percentage grew to over two thirds. (4)   Today we charge everything, also using our phones as digital wallets.  We lose touch about what things cost and how much we are spending.  Consider converting back to carrying cash when you go out to dinner or have drinks with friends after work.  Now your budget is limited by your cash on hand.
  5. Review your receipts before you leave the grocery store.  If not in the store, at least check it over in the parking lot.  Supermarkets have specials.  They do markdowns.  They run sales.  According to Zippia, the average supermarket stocks 39,500 items (2020). (5) It is not inconceivable the shelf price ticket does not correspond with the bar code scanned at the register.  In our experience, the store will quickly make an adjustment if you point it out to them as quickly as possible.
  6. Shop with grocery coupons.  You might think clipping out coupons from magazines went out with black and white television.  They still exist.  Your favorite supermarket likely has a digital coupon program too.  Flip over your supermarket register receipt and you may see discount coupons.   The automatic checkout machine in the grocery might print out a series of coupons based on the items you purchased.  It is worthwhile to take the time to save money.  If you saw paper money lying on the sidewalk, you would stop to pick it up.
  7. Generic brands will do just fine.  You buy certain products where the brand denotes quality.  You buy other products that are commodities.  A few examples are milk, flour, butter, eggs, salt and sugar.  These are substantially identical and sold at a cheaper price if they are labeled as store brands.  In some cases, they are made by the same company as the famous branded product.

Many clients are seeing their budgets squeezed as inflation hits home.  Some have forgotten how to shop.  You can help them save money by sharing practical tips as a refresher.

Related: Can Your Client Run Their Personal Finances Like a Business?