There have been some excellent posts in the blogosphere about how to save money in this ridiculous economic crisis. New Midlife Mommy wrote the most informative piece on clipping coupons that I’ve ever read in my life. If you clip, you’ve got to go over there. There’s also a great post up at Antique Mommy where readers share what they’re doing in the money crunch.
I am very much “into” money. I do all the bills, I check the account balances, I figure out what to put where and how much. I really enjoy it, actually. I pay attention to sales and shop bargains. I come up with the family budget. I check interest rates to see if we should put our money elsewhere, and figure out whether we should try to pay off our car faster or save it for something (emergency fund, retirement, etc) instead.
But over the years, I’ve realized that typical money saving methods do NOT tend not save our family money. And here’s the main conclusion I’ve reached: Saving Money is not necessarily the same as Spending Less Money. Or, in other words, getting a “good deal” is a bad idea if I buy something I didn’t need to begin with. Or, to put it one final way, it’s far more important to look at the big picture of my overall spending, rather than the little picture of savings on an individual item. For example:
1.) Clipping Coupons: I did this obsessively for years. But when I really tracked our money, I realized I was buying items that we didn’t use or need. For example, if I had a coupon for peanut butter, and the grocery store gave double value to coupons, it’s a “great deal,” right? It’s not a great deal if I already had peanut butter at home. So even though I just saved money off the cost of peanut butter — if I didn’t have a coupon to begin with, I would have not bought it at all.
I know what you’re about to say — “But eventually, you would need more peanut butter, right? So then you already have it sitting in your pantry, right?” Well, yes and no. If I hadn’t bought the peanut butter with the great coupon, I would have waited to purchase it when I really needed it, which could have been several weeks later. The savings of putting off purchases is sometimes really huge in and of itself. It’s more money in my pocket to use NOW on things really essential, and less money spent overall.
Also, if I had run out of peanut butter at home, I would have probably gone several days eating another kind of sandwich. Those days I’m not eating peanut butter and eating other things in the pantry saves me more money overall, than the coupon ever would have. And remember, manufacturers and grocery stores make coupons because they make big bucks off of coupons not because they’re giving a consumer a great deal. If a coupon causes you to enter a store when you otherwise didn’t have to, then the coupon is costing you way more than it’s saving you.
2. Shopping sales: I always pride myself on a great bargain. Have you been to my house? If you have you know that I talk ad nauseum about the beautiful 8 x 5 rug I have in my office, for which I paid $75. So yes, I do shop sales. But for the most part? Sales do nothing but cause me to spend money. If I take the kids to Kohl’s to buy them a pair of pants, and there’s a buy-one-get-the-second-one-at-half-off deal — this theoretically works well if I have two kids who each need a pair of khakis. But it only works if I just buy the two pants, and not get so excited about the sale that I buy FOUR pants. Because many times, I justify purchasing more things when there is a great sale. This ends up causing me to spend more money overall, despite the fact that my “savings” is big.
Here’s another example. What if only one of my kids needs a pair of pants. And what if the sale is 50% off all kids’ pants? That’s a great deal! But what will I do? I will walk out of the store with 2 pairs of pants, instead of the one I needed. “Aha”– you’re saying — “You still bought 2 pairs of pants for the price of only 1 pair! So you spent what you planned on spending and got 2 pairs of pants instead! That’s a steal!” Yes, that’s true. But the TRUE savings would have been if I just bought 1 pair of pants at 50% off, because that’s all that I really needed. The TRUE savings is not the amount of savings off a particular price– the TRUE savings is the tab at the end.
3. Buying in Bulk/wholesale warehouses. Scribbit recently wrote a great post about her toxic relationship with Costco. Her main point is something I’ve been trying to tell friends for years — Buying in bulk costs you more overall. If you don’t believe me (or Scribbit), I offer you a challenge. Look at how much you spend on groceries and household items every month when you buy in bulk (either at a wholesale warehouse or at a place like Target). Then, stop buying in bulk, and only buy what you need for a certain amount of time (6 months, whatever). Now, calculate how much you actually spent. I’m willing to bet you spent less money money by NOT buying in bulk.
4. Quit going to the More Fun Stores: Scribbit’s relationship to Costco was very similar to mine with Target. I knew I spent too much at Target, but I didn’t realize how much until the Atlanta Gas Crisis earlier this fall. Once I realized that I’d have to go several weeks on one tank of gas, I cut out all unnecessary trips, which meant that I went to the doctor’s office and the dimly lit, Ugly, Boring grocery store around the corner. No more trips to Target.
So for a period of nearly 2 months, I went virtually nowhere but these two places. The Ugly Boring Grocery Store did wonders for overall reduction of what I spent. Yes, it’s much more expensive to buy lightbulbs and diapers at the grocery store than at Target, but again, you have to look at the big picture. Spending more on a lightbulb at one store where you know you’ll get in and out quicker (and spend less overall) costs far less money than going to Target and dropping $25 to $50 that you had never intended to spend to begin with.
The result? In the past two months, my spending has decreased dramatically. I couldn’t believe my last credit card statement. We saved so much on groceries and household items because I simply limited my spending to the Ugly Grocery Store that I was able to make an extra car payment.
So the irony of the gas crisis? Even though gas was outrageously expensive, our expenses went DOWN overall, by a couple hundred dollars at least.
What tricks do you do to save money that sometimes fly in the face of conventional money-saving advice?