I recently came across the article Spending Smart: Seven habits of highly successful spenders, written by Gregory Carp of the Chicago Tribune and it inspired a post!
The truth is, living below your means has two sides. There is the side of saving money and being frugal and there is the side of how much you make. There are millions of blogs out there that focus on one or the other, but only a handful that look at both. In fact, there are even blogs out there that will focus on one side and actually tear down the other.
If you want to have a successful financial life then you need to look at both sides of living below your means. Coupons and living a frugal lifestyle will save you money (and allow you more money for the things you want to purchase) and making more money will allow you to have more money for the things you want.
Being a successful spender is important. Spending smart is another characteristic of a financially smart, frugal person. Seven habits of highly successful spenders is a collection of characteristics that are shared among the top personal finance gurus (Suze Orman, Dave Ramsey, David Beck, Clark Howard, Jean Chatzky, and others). They may disagree on some points, but these ones always ring true.
1. Care about Spending – If you want something then budget for it, research which option(s) are best for you, and realize the financial impact it will have. A penny saved is worth more than a penny earned.
2. Sweat the small (recurring) stuff – In the example in the article they point out that the average household spends $10000 a year on groceries and the average coupon user will save 50% of the bill. While clipping one coupon may seem silly, when you look at the big picture $5,000 a year is a lot of money on something you need. Learn how to play the drugstore game at Walgreens or CVS and you can save 90-100% of those costs.
3. Shop it – Compare prices and research your purchases. Know what a good deal is before you purchase the item.
4. Get FIT – Food, Insurance, and Telecommunications are the three best categories to cut. Food can be cut by using coupons and following your local ad (Little People Wealth does the coupon match for HyVee and Price Chopper each week and if you have a different local store then try the forum at We Use Coupons). Insurance varies wildly so use a company such as Insure 4 Less that will compare multiple quotes for free.
5. Know Thyself – If something is important to you then spend money on it, but if it is important only to your neighbor then let it go! Spend your money on things that are your priorities and save money on the things that are not. You will feel richer because you will be less likely to have to deny yourself things you want and you can stop comparing yourself to people who have a bunch of things you do not need.
You also need to know your spending style. If you are good with credit cards then use them! If you are not then avoid them like the plague. If you do not save much then set up an auto save program with your bank. Know what is stopping you from financial freedom and personalize your path.
6. Keep an eye on the prize – Set goals. If you have a goal in mind then it will be easier to stick with it.
7. Know there’s no free lunch – Look for the “catch”. Free services and products usually come with some sort of price. An example is mint.com. I love Mint! I have been using them for years. It is a free personal finance program that will track your spending, allow you to set goals, and track your loans/investments/savings accounts. It is free, but they do have ads and affiliate links. Sometimes the advice they give me will include an affiliate link. That is okay by me, but it might not be for you.