How to spend money wisely in today’s economy

Thrift was once considered a virtue. Children learned that “a penny saved is a penny earned,” while adults cautioned them to remember that “a fool and his money are soon parted.” But these lessons have been forgotten in today’s consumer society. It is easy get credit and people that try to save a penny are often considered cheap. However, in the current economy, cheap is being re-invented as frugal, thrift is becoming a virtue once more and the old saying about a fool and his money is a timely reminder of the importance of smart spending.

Ignore the hype

A crucial difference between the past and the present is that now there is a constant bombardment of clever advertising all around. It seeks to persuade consumers that they must have all the latest products. However, while the purpose of advertising is to sell products by creating wants and fueling consumer demand, the smart approach is to tune out the ads and decide whether something is simply a want or actually a real need.

Be prepared to do battle

Having decided on a need rather than a want, the next tactic is to take a long, hard look at the activity of shopping. Many people regard shopping as entertainment, but in reality, it is a deadly serious battle with salespeople who are dedicated to separating shoppers from their money, particularly if they receive commission on sales.

In the face of all the sales hype and persuasive salespeople, shoppers’ prime objective should not be to spend thoughtlessly, but rather to fight to hold on to as much of their hard earned money as possible. In order to do this, some sound battle tactics are required.

Battle tactics

The most important tactic is to be an informed shopper. Research the prices and quality of various purchase options by talking to friends, checking out online blogs and reading Consumer Reports online or at the local library. It is possible to save both fuel and time by phoning different stores or checking their websites to compare prices. And since a smart spender never pays the full price for anything, it is essential to check flyers, local papers and the Internet to find a good sale.

It is also important to bear in mind that quality is important, and that cheaper products do not always save money. For example, in the long run, a $1,500 couch that lasts 25 years is a better buy than a $500 couch that only lasts five years. If the budget only allows $500, then it is better to look for a quality second-hand couch in preference to a poorly made new one.

Finally, smart spenders always avoid donating money to banks and finance companies in the form of interest. This can be accomplished by having the patience and discipline to save up for a future purchase via a budget, rather than using credit for instant gratification. It is wise to plan ahead by anticipating future purchases and by beginning to save early. Another advantage of paying cash, apart from saving interest, is the possibility of negotiating a cash discount.

So, a smart spender follows three simple guidelines: research, buy quality and pay cash.