Learning how to develop smart shopping and savings habits are essential parts of growing up. Unfortunately, for many of us, financial literacy and smart consumerism are not taught to us in school or by our parents. In today’s post, I’m sharing 3 sways to make smarter shopping decisions.
Why is Smart Consumerism Important?
Although shopping offers temporary relief from stress or sadness, buying “things” will not bring about joy. In fact, excessive spending has the power to hold you back from living an active, engaging life, especially as you age. A recent survey by Bankrate showed that 65% of Americans are saving little to nothing. This is alarming.
Growing a healthy savings account is essential for covering important, unexpected events. Expenses or unplanned life events could include things such as sudden job loss, a health condition, or essential home repairs. Moreover, building a savings deposit is important for maintaining quality of life once you retire.
Frugal shopping habits and healthy savings balances go hand in hand. With that in mind, the focus of today’s post will be on how to make smarter shopping decisions. More specifically, I will be focusing on habits that will help you to foster a healthy mindset when it comes to shopping.
Before we dive into how to make smarter shopping decisions, I need to provide a disclaimer. Healthy shopping habits look different for every individual depending on current income status, projected or potential income, life stage, or other life circumstances. Nevertheless, the three main pieces of advice on how to make smarter shopping decisions have the power to help anyone form the basis of their steps towards financial freedom.
How to Make Smarter Shopping Decisions
Rule 1: Create a Monthly Budget
Learning to create a monthly budget is vital for anyone needing to better manage his or her finances. Budgets need to include essential categories such as:
Loan Payments (if you have them)
Why is budgeting essential to developing smart shopping behaviors?
Developing and maintaining a budget helps you to figure out your discretionary income. But what is discretionary income? Discretionary, or disposable income is defined as:
the income remaining after deduction of taxes, other mandatory charges, and expenditure on necessary items.
Understanding your discretionary income is essential because it helps you to understand how much money you have left from your paycheck after paying for all of your necessities. As a rule of thumb, you should never need to dip into savings to pay for discretionary (or non-essential items), nor should you take on debt to pay for those items.
For example, if you are makeup-obsessed like I am, you should not need to dip into your savings account to pay for a new release. Additionally, you should not make it a habit to use services that help you pay for a release in installments.
If you are regularly dipping into your savings or taking on debt to pay for non-essential goods, that is an indicator that you are living beyond your means. To note, sometimes you may have to dip into savings when making a big life purchase or for an occasional must-have item. However, the key thing to understand is that this type of behavior should not be normalized and done frequently.
Don’t forget to budget to ‘paying yourself’
When building your monthly budget do not forget to include a section that accounts for paying yourself. In other words, do not forget to budget for savings.
Most experts agree that it is important to save at least 3-6 months living expenses. This may feel daunting for anyone making minimum wage or living paycheck to paycheck. If this is you, my advice is to start small. Saving $5.00 a month is better than saving nothing. Over time, your savings will grow and continue to accrue interest.
To encourage you to save, pay yourself first. This means that before you spend any money on ”fun” things, you should first put away the amount you want to save each month. Pay your bills and pay yourself. Only use what remains for spending.
Create a budget system that works for you
Whether you use a traditional excel spreadsheet or a mobile application, the key is to find a system that works for you. Use a system that you know you’ll upkeep.
Rule 2: Plan Ahead
How often do we spend more money than necessary because we fail to plan ahead? By planning ahead, we can make more strategic decisions regarding the way we spend our money. Instead of running to takeout, chain-made coffee, expensive juices or smoothies, we should try to plan our meals ahead of time wherever we can.
For example, If I were to buy a salad every day from Sweetgreen it would set me back $55.00 a week. Add a $3.50 daily coffee from Dunkin Donuts and its another $17.50. Whereas, if I were to create my own version of that salad at home and make my own coffee, I’d spend significantly less.
When trying to develop smart shopping behaviors, consider spending more time to plan ahead meals. By meal-prepping and creating a shopping list, you’ll spend less money on takeout and feel less tempted to make impulse purchases at the grocery store.
Moreover, meal prepping saves more than money. Think of all the time you’ll save by *not* waiting in line at Starbucks, Dunkin Donuts or your favorite takeout spot. Additionally, by planning meals ahead of time, you are more likely to make healthy food decisions.
Rule 3: Evaluate Everything
What do I mean?
We live in a world where everyone is always trying to sell us something. Whether someone is paid to promote a product or not, we are constantly bombarded with messages to spend our money. Nevertheless, it is on us to do our own research before we make a purchase based on someone else’s recommendations. So how do we better evaluate purchase decisions?
First, assess whether the reviewer has an incentive to promote the product or service
Ask yourself a series of questions to determine the reviewer’s relationship with the brand:
Is this review sponsored? In other words, is someone being paid by a brand to talk about the product in a positive light.
Has the review paid for the product or received it for free? It true that someone can give an honest review on PR. However, if someone hasn’t spent his or her money on a product or service they are likely going to be less picky than they would have if they spent their own money.
Has this reviewer received other benefits from the brand? For example, does this individual go to parties or trips hosted by the brand.
Will the reviewer make a commission off of your sale? If someone can make money off your purchase he or she may be more inclined to gloss over negatives.
Is the reviewer friends with a prominent owner of the brand? Whenever most influencers review another influencer brand, he or she is less likely to critique the brand with the same comments they would normally give to a regular brand
You may still decide to make a purchase if you answer ”yes” any of the above questions. Not all influencers using codes or affiliate links are dishonest – heck, I use them. I even link products that didn’t work for me! However, these factors should give you pause before you rush to spend money.
Second, evaluate the style of review
Not all reviews are made equal. For example, I rarely trust a first impression or haul-based review. In fact, my only exception to this rule is if someone films an all-day wear-test with updates throughout the day.
But honestly, how can someone tell if you a product is amazing if they’ve only used it one time? Unless a product causes a skin reaction, it is impossible to determine whether or not something is good for bad.
Additionally, may bloggers and vloggers fail to follow-up with their audiences after they share a huge haul. How many of the hauled products become favorites? How many of those products just end up sitting in a drawer, untouched?
First impressions and hauls can serve as introductions to products. However, they should not be the tipping point that makes you spend your hard-earned money.
Third, dissect the reviewer’s language
Telling a an audience that a product or ”great” or ”so good” doesn’t mean a damn thing. ”Great” and ”good” are subjective. They provide no real detail.
Instead, look for reviews with descriptive language that actually explain why the reviewers likes a product. Did the product last all day? Did it make the skin look airbrushed? Or look for content that shows the reviewer using the product in question.
Fourth, ask yourself if you have the same tastes or needs as the reviewer?
For example, I love watching KathleenLights videos. However, she has dry skin, while I have oily skin. Chances are unlikely that she and I will be looking for the same things in skincare or foundation.
Also, consider the reviewer’s environment or lifestyle. For example, someone living in a dry, arid climate will experience differences in wear-time of a foundation than someone living in muggy New England.
Also, wealthier individuals may not bat an eyelash at luxury price points. However, if you are on a budget, you have to honestly ask yourself if you feel the product will be worth it for you.
Final Thoughts on How to Make Smarter Shopping Decisions
Unfortunately, most schools don’t take the time to teach students financial literacy. However, there is a bevy of great online resources and techniques that can be adapted to fit everyone’s unique needs.