When Bargains Cost Consumers Money

People who lived during the Great Depression learned how to provide for their families by spending very little money.  Sadly, during the Great Recession, those lessons are being revisited by many consumers today.  Often, it can be tempting to buy things because they look like they are a great deal.  However, the smartest shoppers know how to manage their money by limiting their spending and allocating finances wisely.


Managing a Monthly Budget

For many families, living within a budget has become a monthly reality.  With rising food prices and other expenses, it is important to carefully plan how to spend each penny.  Many people have found that even paying their minimum credit card payments is a challenge each month.  This can be especially true for families faced with unemployment or decreased income.

If you do not currently have a monthly budget written down, it is important to do so in order to gain a real understanding of how you are spending your money.  Once done, you can begin to make conscious choices about spending your available income.  Start by keeping track of every penny you spend every month.  This includes writing down each time you buy your favourite iced coffee drink or get gas.  Also include regular utility bills, credit card payments and any other regular expenses you have each month.  You may be surprised to discover how much money you are spending on unnecessary items on a regular basis.  Once you see how you are spending your money, you can then choose which items to eliminate from your spending habits.

One approach to monitoring spending is to shop using lists.  When making up a grocery list, for example, only place items on the list that is necessary for restocking needed food stocks.  When shopping, do not vary from the grocery list.  Carefully look at shelf labels to evaluate whether the item you are buying is actually the best value.  As you place items in the cart, use a calculator to keep a running total.  Have a spending limit and stop placing items in the cart when you have reached that limit.  When shopping, you can also limit your spending by only using cash and not carrying credit or debit cards into the store.

Even things that appear to be a bargain on the surface are not always the best way to spend your money.  Recently, dollar stores have gained popularity because of the low-cost items they carry.  However, in a recent Investopedia article, it was explained that many dollar store items contain dangerous chemicals.  Additionally, dollar store items are commonly sold in smaller amounts, resulting in spending more money for those products in the long run.

Taking Control of Finances

By more carefully monitoring monthly spending, you may find that you are able to manage your money better.  You can take money that you save on groceries and other items and use it to pay down credit cards or other debts.  When you stand at a yard sale, debating with yourself over that classic vinyl album, think about other smarter ways you can spend that money.

For many families, reining in their spending habits takes practice.  Children often have a difficult time understanding why they cannot have the latest video game or that they cannot go on the big expensive family vacation.  However, by engaging the entire family in learning how to spend money wisely, you will be teaching your kids good financial management habits.  In the process, you may also be able to find ways to pay off credit cards and other debts too.

Byline

Karl Stockton regularly writes on payday loans.