My Wealth Builder: Challenge to Saving Money
Super Saver over at My Wealth Builder: Buy Only What You Need has written an article about the challenge to saving money. This sounds like a fun money game to play with your best buddy.
The challenge to saving is that most of us spend all of our monthly, biweekly or weekly paycheck before we have received it. To get money for savings, I had to break the cycle. I am not a big fan of budgeting. It is kind of like dieting. Most of us can do it for a short time, but then we fall back into the old habits.
The strategy I like is to "buy only what you need." A colleague and I started doing this in the late 1980's. We agreed to only buy what we needed for one year. It worked so well for me in that one year that I continued to use the strategy.
Here's how it works. Start with either big ticket items (electronics, cars, appliances, etc) or regular purchases (newspapers, magazine subcriptions, cable service, cell service, eating out, happy hour etc) and ask yourself before each purchase, "Do I need this item?" In some cases, the answer will be "yes." In other cases, the answer will be "no." Start eliminating the no's and saving that money. It adds up.
When I started doing this, I was surprised and how many purchases I didn't need. I dropped my daily paper ($100/year), started packing my lunch ($20/week), and took up running instead of joining a health club ($30/month). I never subscribed to cable ($20-50/month), I still don't have a personal cell phone ($40/month, but people think I live the dark ages), and I have a regular TV (not HD or wide screen .)
The savings added up and I took that money to the bank.
Here's where the debate occurs. What is really "need?" I do have a computer, internet service, VCR/DVD player, dishwasher, and pool table. My friends have told me none of these are real needs. And they are right. I could live without a dishwasher appliance or a pool table. And I would if I needed to do so. However, I am also ok with buying them since I have already reduced many items I don't need.
The other benefit of asking the "Do I really need it?" question is that it prevents impulse buying. I just read an interesting article on why we get the urge to impulse buy and why we should avoid doing it. Money on the Brain says our brain is delighted by novel items and experiences. So seeing new items causes people to want to buy them. Advertisers and marketers know this and leverage the situation. However, owning it doesn't turn out be as delightful as considering the purchase and buyer's remorse occurs. Hence, checking if I really need it before buying saves the disappointment and puts money in my bank.
Break The Spending Habit
The challenge to saving is that most of us spend all of our monthly, biweekly or weekly paycheck before we have received it. To get money for savings, I had to break the cycle. I am not a big fan of budgeting. It is kind of like dieting. Most of us can do it for a short time, but then we fall back into the old habits.
The strategy I like is to "buy only what you need." A colleague and I started doing this in the late 1980's. We agreed to only buy what we needed for one year. It worked so well for me in that one year that I continued to use the strategy.
Here's how it works. Start with either big ticket items (electronics, cars, appliances, etc) or regular purchases (newspapers, magazine subcriptions, cable service, cell service, eating out, happy hour etc) and ask yourself before each purchase, "Do I need this item?" In some cases, the answer will be "yes." In other cases, the answer will be "no." Start eliminating the no's and saving that money. It adds up.
When I started doing this, I was surprised and how many purchases I didn't need. I dropped my daily paper ($100/year), started packing my lunch ($20/week), and took up running instead of joining a health club ($30/month). I never subscribed to cable ($20-50/month), I still don't have a personal cell phone ($40/month, but people think I live the dark ages), and I have a regular TV (not HD or wide screen .)
The savings added up and I took that money to the bank.
Here's where the debate occurs. What is really "need?" I do have a computer, internet service, VCR/DVD player, dishwasher, and pool table. My friends have told me none of these are real needs. And they are right. I could live without a dishwasher appliance or a pool table. And I would if I needed to do so. However, I am also ok with buying them since I have already reduced many items I don't need.
The other benefit of asking the "Do I really need it?" question is that it prevents impulse buying. I just read an interesting article on why we get the urge to impulse buy and why we should avoid doing it. Money on the Brain says our brain is delighted by novel items and experiences. So seeing new items causes people to want to buy them. Advertisers and marketers know this and leverage the situation. However, owning it doesn't turn out be as delightful as considering the purchase and buyer's remorse occurs. Hence, checking if I really need it before buying saves the disappointment and puts money in my bank.
2 Comments:
Sherry,
Thanks for linking to my post.
It is a great challenge to do with a good friend. MSN.com recently wrote about people doing the same challenge for a month. I guess we were ahead of our time:-)
Super Saver,
Your welcome! I love the idea and I'm sure when others see this they will find it a fun challenge also.
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