In a previous article on MyWifeQuitHerJob.com, I discussed different ways that my wife and I save money on a day to day basis without drastically affecting our lifestyle.
While finding good deals and extending your money is an important aspect of accumulating wealth, deciding the right things to buy and avoiding spending altogether is every bit as crucial.
It also helps to leverage rewards credit cards to earn free cash and travel.
Because spending and saving go hand in hand, the ability to allocate your funds wisely coupled with a proper savings plan will exponentially increase your pool of wealth.
So how does saving money differ from spending money wisely? Saving money is the act of finding the least expensive method of making a purchase that has already been planned.
Spending wisely pertains to the decision making process that goes along with making a purchase.
In this article, I will focus on on the latter.
Editor’s Note: If you are interested in learning how to start your own business, click here to take my FREE 6 day mini course on ecommerce.
Know Your Purpose For Spending Money
Why do we make purchases? Most of time, my wife and I buy things because they are either aesthetically pleasing or they make our life easier in some way. Whenever I want to make a purchase, I always ask myself the following questions.
- Will this object make my life easier?
- Will this object provide me with lasting pleasure?
- Is this item filling a void in my life?
I’d say that 95% of the time, the answer is no to at least 2 of the 3 questions. If you find yourself answering yes to all 3 questions on a regular basis, you should sit down, rethink your priorities and raise the bar.
My general philosophy is that if you keep your purchases within the above criteria, the less often you will be looking out to buy more stuff. Spending wisely starts with looking deep into your life and figuring out what will bring you lasting happiness.
Finding out what you truly value can be an iterative process. Sometimes, you might feel like you absolutely need something only to lose interest shortly after the purchase. Early on, I set the bar way too low and I now have a garage full of unused exercise equipment to show for it.
Just the other day, I decided to fire up the old treadmill only to be greeted with a cloud of dust. In any case, it may take you a while to establish the proper criteria for justifying a purchase. A good way to circumvent impulse buys is to impose a mandatory waiting period on all purchases.
That way, you’ll have to think long and hard before you make the decision.
Avoid Shopping As A Recreational Activity
Have you ever gone to the mall out of sheer boredom? Have you ever gone shopping without a clear objective of what you set out to buy? One of fundamental principles of spending wisely is to avoid temptation and shopping for fun.
These days I don’t even browse catalogs anymore because I’m a major sucker for advertisements. My major weakness is the Fry’s Ad that comes out on Fridays. For all of you who aren’t familiar with Fry’s, Fry’s is a gigantic electronics store that carries almost every gadget imaginable.
The Friday ad always has killer deals that only last the weekend. It doesn’t help either that I live within 5 minutes of the store. So on Fridays, I avoid the newspaper at all costs.
I also avoid watching television as much as possible since I’m a huge sucker for food advertisements. I remember the first time I saw the Chili’s ribs commercial, “I want my baby back baby back….I want my baby back baby back…Chili’s baby back ribs”, I immediately went out and got myself a full rack o’ ribs.
It was damn good but that meal set me back 70 bucks between my wife and I. The meal was entirely frivolous and unhealthy too. But damn, those ribs were good. I’m salivating just thinking about them.
In any case, the takeaway here is that you need to understand your tendencies and try to avoid temptation when you can. You are just asking for trouble if you go shopping without an objective.
Avoid Shopping With People That Like To Shop
There’s this friend of mine who I refer to as “Damage”. I’ve given her the “Damage” nickname because whenever she goes shopping, she tends to swipe her credit card so often that she damages the card. The problem with “Damage” isn’t so much that she likes to shop but that she has this way of making those around her buy more than they need as well.
Damage: Hey, this outfit looks cute. Why don’t you try it on?
Wife: No, it’s too expensive. I shouldn’t even bother.
Damage: Cmon. It doesn’t hurt to just try it on. Have some fun!
Wife: Ok (tries on the outfit)
Damage: It looks great on you! Wow! Just look at yourself. You look fantastic!
Wife: Really? Oh but its 200 dollars just for the top
Damage: Look, it’s 50% off. It’s a steal I tell you. Items at this store are NEVER this cheap. Live a little! You deserve it, especially after carrying that baby for 9 months!
Wife: You’re right! I deserve a push gift! Plus it’s a good deal.
It only took one shopping trip for me to figure out that “Damage” was a bad influence. It’s fine to hang out with her in social settings but I try not to let my wife go shopping with her anymore.
I too have several friends who like to tempt me on a regular basis.
Friend: Want to see the Fry’s ad?
Me: No, why would I want to see 10 pages worth of killer deals on cool stuff that I probably don’t need but would like to have?
Friend: Are you sure? They are having a sale. This ad probably contains a chock full of deals. Want to take a look?
Me: Nupe. Not interested at all.
Friend: Wow! There are some crazy deals in here and some of these are only for a limited time.
Me: Oh yeah? (Voice starts shaking) That’s nice.
Friend: Didn’t you say that you’re in the market for a new hard drive?
Me: Nnno, why would you say that? (Damn how did he know?)
Friend: Because there’s a great deal on a 500GB drive. Wanna see?
Me: I guess it doesn’t hurt to take a look…
Anyways, you get the point. Certain friends are great for hanging out, but not for shopping. Stay away from negative influences!
Don’t Buy Specialized Products
Stick with products that have a variety of uses rather than a single specific purpose. For example, do you really need to buy a special tool to help peel your orange when you can just use a knife and your hands? Do you really need an ice cream scooper when a regular spoon will suffice? Do you really need a separate printer, fax machine and scanner when you can get an all in one device?
In general, my wife and I try to stay away from single purposed items. We also tend to buy quality items that will either last a long time or save us money in the long run. For example, we’ve replaced all of our lights with compact fluorescent lighting to save energy and we also use rechargeable batteries in all of our devices.
Spending With Your Brain
Let’s face it. We are all human and we all sometimes get carried away with our purchases. The key to spending wisely is to cut out as much temptation as you can and evaluate what is truly important to you.
Be prepared, because the process of discovering yourself will take some willpower and you may well end up with some dusty old exercise equipment in the garage. But over time, you’ll eventually learn to stay on track.
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Steve Chou is a highly recognized influencer in the ecommerce space and has taught thousands of students how to effectively sell physical products online over at ProfitableOnlineStore.com.
His blog, MyWifeQuitHerJob.com, has been featured in Forbes, Inc, The New York Times, Entrepreneur and MSNBC.
He's also a contributing author for BigCommerce, Klaviyo, ManyChat, Printful, Privy, CXL, Ecommerce Fuel, GlockApps, Privy, Social Media Examiner, Web Designer Depot, Sumo and other leading business publications.
In addition, he runs a popular ecommerce podcast, My Wife Quit Her Job, which is a top 25 marketing show on all of Apple Podcasts.
To stay up to date with all of the latest ecommerce trends, Steve runs a 7 figure ecommerce store, BumblebeeLinens.com, with his wife and puts on an annual ecommerce conference called The Sellers Summit.
Steve carries both a bachelors and a masters degree in electrical engineering from Stanford University. Despite majoring in electrical engineering, he spent a good portion of his graduate education studying entrepreneurship and the mechanics of running small businesses.