Spend Less, but Spend Better

Can you spend less? Of course you can without affecting your standard of living. It is simple to spend less; you just cut your expenses. Just make some small changes to your spending and still have the same or better standard of living. All it takes is changing your priorities and a little planning. Are you interested? Let’s go through each step together and make some changes.

Start at the beginning!

Where do you start? You can start with your budget. If you have not prepared a budget, start with your spending and create a diary of where you spend your money. You can start with your income and make sure you are contributing to your retirement savings. First the money contributed is tax deferred! In other words, you are contributing pretax dollars which should save you some taxes. Often your employer will match a portion of your contribution too as an incentive to save. This is a no-brainer and a good choice.

Get rid of stupid fees

There are many stupid fees that you should never pay. Take a look at those first to remove or decrease! Some of them are bank charges for ATM, checking account and check printing, and overdraft fees. Although convenience is important, you need to find a bank that has the lowest fees. It may be a community, regional or even a national bank. I would include credit unions and online banks too. If you direct deposit your paycheck into the account, your bank is more likely to waive the checking account fees.

Overdraft and late fees are great for the banks, but not for you. There are several ways to avoid these fees. You can schedule your payments using an online payment through your bank. My bank guarantees delivery by the date selected and I save on stamps. Win/win!  The better relationship with your bank, the more likely you can get them to waive other fees. I have been with my bank for more than forty (40) years and they waive all the fees (checking account, check printing, safe deposit box).

Question all fees

So far, we covered bank and credit card fees. It shouldn’t stop there, change your mind set to look at all fees suspiciously. You may not avoid all fees, but you should question all fees. You have nothing to lose and may gain a lot. Negotiating is just asking a question! You can save (significant) money negotiating for a home or car. I successfully negotiated buying a large screen TV at a department store, suits at a chain store and even expensive jewelry. You can negotiate on anything successfully!

Expenses

• Residence – We all have to live somewhere unless you are still living with your parents. You are either renting or paying a mortgage. If you are renting, your rent should not exceed one week’s salary. If you own your home the mortgage should be approximately equal to one week’s salary. If you are paying more, you should consider ways to reduce the expense. You could move to a lower cost apartment or share the rent with a roommate. This is true for a home you own too.

• Cable/satellite/entertainment – Many people have cable for their entertainment, is it worth it? It depends on how you use it! Examine the alternatives and consider cutting it entirely! I have cable and internet for my basic entertainment. I max out my retirement savings and I continually negotiate with my cable company to keep my bill reasonable. It is a personal decision, but it should be evaluated.

• Mobile phones – Smartphones have become a necessity, although I have not succumbed to the marketing yet. Mobility and access is important for shopping, social networking, communication and productivity. The cellular industry is finally getting more competitive and the prices are coming down. I gave up my land line about five (5) years ago because it became redundant. Shop around for the best deals and coverage.

• Utility bills – So many complain about their expenses and never do anything about their utility bills. In the heat of summer, I had friends who had utility bills in the thousands. Small changes using a setback thermostat can reduce your bill significantly. A simple change to cold water wash cut my gas bill in half. You can do thing s to reduce your utility bills! I changed my lights to CFLs and saved money.
• Transportation – Until recently, high oil prices increased gas prices to $3-4 per gallon. More of your spending went for transportation and you probably did not change your habits. Most people reduced their driving, but you could carpool, vanpool, take public transportation or even buy a more economical car. When I replaced my 17 year old Honda I bought a hybrid.

• Entertainment/restaurants – Entertainment is expensive, but you have choices! You can rent movies vs. going to the movies. Dining out is expensive, but you can choose inexpensive restaurants. I used to go to Starbucks once a week and cut back to once a month. I also go to restaurants that have loyalty programs.

• Groceries – If you are buying groceries, you do not need me to tell you prices are going up. Many suppliers change their packaging to keep their prices lower, but you are receiving less product. Most of the increases are due to transportation costs. You can change your menus, shop with coupons, use store brands and select supermarkets that have lower prices. I also belong to Costco and selectively buy certain products in bulk there. I also buy my household products at Target for the low prices and 5% rebate credit card.

• Health/Beauty/Gym memberships – Some people may consider some of these products or services optional. I buy certain products online at a deep discount through subscription. Years ago, I gave up my gym membership and created a home gym. You can always walk or run which is just about free although you need decent shoes/sneakers.

• Insurance – I shop my automobile, property insurance every couple years. I want the best insurance for the lowest price. I started with their customer service rating and checked the top five. You can find quality companies and products at good prices if you look for them.

• Shopping – I always bought quality products because it lasts longer and looks better even as it ages. I still want the best price for the quality product or service. I plan my purchases so I have time to shop online or wait for a sale. I bought a Hugo Boss suit (retail $14-1,600) for $350 at a discount store. I did not need it at the moment, however I knew I would put it to good use in the near future. It proved to be a very good investment!

Final thoughts

My approach to spending may be more disciplined than you, but you could certainly use my information to spend less and improve your life. If you take an objective look at all of your expenses, you certainly will find ways to reduce your expenses. It starts with you creating a spending diary to become familiar with your spending. This is the first step to developing a budget to control your spending. You can spend less and control your spending and still have a better standard of living.

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