The title of one of our recent teleclasses was “Spending Your Way to Wealth.” Our guest was Kathleen Fox (www.foxcraftinc.com), co-author with me of Conscious Finance.
Maybe we should have changed the title to “Not Spending: Your Way to Wealth.” Kathleen introduced herself as “congenitally thrifty” and then proceeded to prove it with her suggestions for wise spending.
She began by making an important distinction between being “stingy” and being “thrifty.” Stinginess is hoarding your resources out of fear; thrift is using your resources consciously so you are able to have and do what matters to you. In Kathleen’s example, being stingy is wearing glasses with an outdated prescription and holding them together with duct tape; being thrifty is managing wisely so you have the money to get new glasses when you need them.
Some of her suggestions for wise spending included the following:
1. When it comes to grocery shopping, be flexible. Check out weekly specials, plan your meals around them, and buy accordingly. She cautioned against being too flexible, however. Buying food your family won’t eat is a waste of money, because a bargain is no bargain if it ends up in the trash.
2. Plan ahead for both buying and preparing food. Make planned weekly trips to the store rather than last-minute stops on your way home from work when you’re tired and hungry. She pointed out that, when you have both food in the refrigerator and an idea of what you’re going to do with it, cooking a simple meal at home can be faster and less stressful—as well as cheaper and healthier—than eating out.
3. Do your research. When you’re shopping for big-ticket items like cars or appliances, learn as much as you can about prices, features, manufacturers’ reputations, warranties, and the like before you buy.
4. Think value instead of just price. The cheapest item isn’t necessarily the best value; a more expensive one might last far longer and thus be more of a bargain. For items such as furniture, good-quality, used pieces are often better values than cheap, new ones.
5. Wait for sales. In some cultures, it’s considered foolish to pay full price because buyers are expected to save money by bargaining or haggling. In our culture, we don’t haggle over most purchases but paying full price can be just as foolish. All we have to do is wait for the next sale. This is especially the case when it comes to buying clothes. Kathleen suggested keeping an eye on newspaper ads so you can do your clothes shopping at a discount. She did add one caution, however: if it’s ugly or doesn’t quite fit at full price, it’s still going to be ugly or not quite fit when it’s on sale. A bargain you’ll never wear is not a bargain.
6. Appreciate the value of small savings. It may seem silly to pinch pennies by skipping a cappuccino here or a manicure there. Yet a three-dollar cup of coffee, five times a week, would add up to more than $750 a year. That same amount could more than cover a gym membership, a car insurance premium, or an average year’s cost for dental checkups or dental cosmetics. Learn more about cosmetic dentistry options.
Kathleen’s most important message was that practicing thrift doesn’t make you a cheapskate; it makes you a good manager. It means you care enough about yourself to use your resources consciously. It can help you maintain a margin to cope with emergencies. It allows you to spend your money on the things that really matter to you. Thrift is not depriving yourself; it is valuing yourself by investing in your future.