Last week, I talked about the Rules of Money, and where there is money there is SPENDING. We couldn’t get through Financial Literacy Month without talking about how we spend our hard earned cash. If you want to do well financially, there is a sure-fire way to do it. Spend your money wisely. Remember, one of my Money Rules says it all: It really isn’t about how much you make, but what you do with it that counts.
In my book about personal money management, Money Smart, I share the 10 Rules of Spending Wisely. Over the next few days I will share three of the rules for getting the most from the money you spend.
Spending Rule: Know Your Priorities and Stick to Them
A great way to make this rule a reality is to take a couple of minutes and make a simple list of every immediate smaller purchase you want or need to make. I’m talking everything except normal weekly food purchases. New underwear, dishwashing liquid, toothpaste—you name it. Add to this list any larger purchases that are now at the top of your priority list (a new couch, TV, etc). Then just keep updating this little list whenever there’s something to add or delete and whenever your priority sequence has changed. Doing this, I almost never have to make a special trip because I ran out of something. Most importantly, I know what I want and what my priorities are when I walk into any store.
When you are out shopping and see something you want to buy other than normal food or household supplies, and it’s not on your list, don’t buy it! You especially need to avoid such impulse purchases when the item is more than $25. If you still want the item after you’ve left the store, sleep on it. If you still want to buy it when you wake up, and it involves a significant amount of money, look at your priority list and decide what you’re willing to trade to get it. If you like the trade, then fine, go buy it.
Now that you have your list, you know what you are about to buy and what you will be purchasing fairly soon. When you’re out shopping and feel like it, take a look at the various offerings for your next purchase(s). Think about the exact item you’ll buy when the time comes. I have come to love what this pre-shopping does for me. I end up buying so much smarter and being so much happier with my purchases. This simple strategy also greatly reduces buying again too soon because I bought what I really wanted.