Tuesday, May 25, 2010

Handy Money-Saving Tip: Stop Bargain Hunting

"A bargain is something you can't use at a price you can't resist."-Franklin P. Jones*

In the past year or so magazines, newspapers and television programs have been full of features about how you can save money “in these difficult economic times.” (My retirement plan is to copyright the phrase “in these difficult economic times” and collect a royalty anytime a news announcer says it.)

Invariably these features tell you where to shop for the best prices. Rarely do they advise you not to shop. Not shopping, it turns out, is the only thing that is 100% guaranteed to save you money.

So if you want to really save money, here is my advice: stop bargain hunting. Don’t scour the coupon inserts, don’t “friend” your favorite brand to get a special discount feed, don’t rush to the store on double coupon day. All of these activities are simply giving you new ideas of things you could buy by exposing you to constant marketing messages and shiny new products. That’s what they’re designed to do.

You, of course, are too smart to be fooled and will only buy things you’d be buying anyway, right? Just like you never carry a balance on your credit card. Good for you!

But just on the off chance that you are not smarter than the rest of us, you’re probably better off keeping your hunter gatherer instincts in check by not exposing yourself to the hum of a constant shopping mantra. Let’s face it, the credit card companies would not be in business if we all did what we intended to do with their cards when we got them.

A number of studies have shown that we are prone to idealize the future. We are time, energy and money optimists. For some reason we all think we’ll be richer and less busy tomorrow than we are today.

We picture our work and the income from it as if nothing else will come up in our lives. We forget we’ll still have to fix the car, that there will be weddings and funerals and holidays (somehow those manage to surprise us every year, don’t they?) and your spouse or partner will still want attention. All that carefully budgeted time and money goes out the window when confronted with the shocking reality of every day life.

Since I wrote Broke is Beautiful, personal finance reporters have started to ask me for my money-saving tips. "How do you avoid impulse spending?" My flip answer is, “You max out your credit cards.” It’s a sure way to curb impulse spending. Although I say it with my tongue firmly in cheek, it is not entirely a joke.

When you have no access to funds, you simply cannot shop. After a while, you stop listening to commercial messages. They are for someone else-- those strange beings out there with money. It's a similar feeling to turning the radio dial and landing on a Spanish language radio station. “I can hear it, but it's not for me.”

The real trick is to get to this point before you max out your cards. Tell yourself “I don’t need new consumer goods right now, thank you very much. I have a thing right here in my house I can use.” (As all the news features about “decluttering” your home would suggest, most of us have more useable stuff than we know what to do with, yet we go shopping anyway.)

Stop categorizing yourself as a “consumer.” Imagine that there is a nation out there called Consumerica. The residents of this land are called “Consumers” and they communicate through commercials and branding messages. You don’t speak that language. Saving the entire price on an item is a bigger bargain than 50c off any day.

*Thank you to "Ultimate Cheapskate" Jeff Yeager for sharing this quote on Twitter (@JeffYeager)