I was out shopping this past weekend with my wife and twice I was stunned to see so many people, even now, continue to spend their money in the same ways they always have.
I was in a Safeway store where signs touted all the great grocery buys. Only $3.99/lb! Your savings- $1! This week only! $5.99-usually $7.50!
So the “regular prices” are $4.99/lb and $7.50, but where did those prices come from? Don’t people know that often they are just made up? For the items I was familiar with I knew that the prices of those products were a good 30% lower at WalMart and cheaper yet at Costco. So why would I ever pay so much more?
Now my wife and I do buy a few groceries at a Safeway, Nugget and sometimes Trader Joe’s—about once a week. I also know our average bill when we do. It’s between $15 and $30. The bulk of our everyday shopping is done at CostCo and, to a lesser extent, at WalMart and local produce markets where prices are so much better. As we walked around the Safeway store I saw the endless full baskets. People aren’t just buying a couple of fresh items. They’re buying everything!
A couple of hours later we did a favor for some visiting friends who wanted to go to one of the designer outlet malls in our area. We don’t go there very often so it hit me particularly hard to see the same game being played out, this time with prices running into the hundreds and sometimes more. It just didn’t go down well for a guy who buys designer jeans for $19.99 at Costco, whose wife buys clothes and accessories online for half to 2/3rds off from various sites from Abercrombie & Fitch to Amazon.
Even though this was an outlet mall, the prices were still noticeable higher than they are for similar designer items at Costco and at any number of online sites. So once again I had to wonder why people would pay so much more than necessary! Why would anyone not take the time to shop around for the best prices and save a lot of money?
Here we are in a world where people are at risk of losing their job, with unemployment or underemployment running between 15 and 20%. In a world where over 60% of our families now live paycheck to paycheck. In a world where 10 million baby boomers can’t retire, where the stock market has gone up a total of 0% since the turn of the century and -30% adjusted for inflation.
And yet most people continue right on with the same spending habits they’ve followed for decades, even though they don’t have to!
I can think of no financial move more important right now than to update spending habits and to start saving a lot of money by spending smart, really smart. Understand that I am not taking about doing without. I’m talking about buying the same things, but paying a heck of a lot less for them.
I am confident that most families can save 10% or more of their take home pay just by spending smarter. Put that money in an IRA and, pre-tax, we’re talking about saving 15% of your income each year this way. For the average family making $60,000 a year, that amounts to $9,000 a year. Want a better retirement and more financial security? At a 6% return, $9,000 a year becomes $123,000 in 10 years, and $346,000 in 20 years. But you don’t have to wait 10 or 20 years. Think of how fast that kind of saving can change the game for you.
Spending smart isn’t just about buying from the right places. There’s a lot more to it, including self-insuring and following each of these five additional ways to spend smart.
Don’t wait—start today! Time is your greatest friend if you have enough of it, but your worst enemy when you don’t. A sound financial future is truly in your hands. So take the winning road and spend smart. It’s one of the best financial moves you can make.