FPA member Catherine M. Seeber, CFP®
Last Updated: February 13, 2012
So what resources did we have in the old days to save money? A handful of sheep, maybe some bartering. How about the coupon clipper who spent hours on a Sunday morning organizing small pieces of paper into categories and storing that “buy one, get one free” coupon in an overstuffed coupon holder?
Not so long ago, information overload and temptation really weren’t factors. Today, we don’t even have to turn on our computer to buy a wide range of goods and services from every corner of the globe; we just use our phones. Consequently, with such conveniences, cutting back can be a challenge. But adopting a thrifty lifestyle does not mean you have to move into isolation. We are talking about a new thrift, a modern thrift, a thrift that takes in all the complexities and oddities of modern life. A thrift that even allows for splurges and a little taste of luxury. The new thrifty has become less of a “how to” and more of a way of life.
Being thrifty is not about being cheap — it's about being smart and self-sufficient. It’s about assessing your lifestyle and adopting a less expensive way to live. It’s about being AWARE. Here are a few tips to take advantage of what our modern world has to offer:
The “B” Word: You are tired of hearing about it. Financial literacy gurus have gone so far as to rename budget to savings plan in an effort to avoid the negative connotation of paying attention to how you spend money. In order to distinguish between what you “need” as opposed to what you “want” and to determine where the majority of your income is spent, you have to look at the numbers. You have to get a sense of how you live on paper and with online banking, credit card annual summaries and easy-to-use software products, compiling information has never been easier.
Learn to Negotiate: The word “fixed,” as in “fixed expenses,” has the ability to change its identity as well. For those absolutely necessary budget items, wiggle room has surfaced. The recent economic turmoil has resulted in fiercely competitive opportunities from major corporations. Cable and phone companies have bundled services and are willing to “cut deals.” Waste service companies are also participating and looking for quantity. Converse with your neighbors; the greater number of accounts the waste company can add in the most condensed radius to your home, the bigger discount you may experience. And don’t forget to call your car and homeowner insurance agents to see if they have any new programs you might be eligible for to lower your premiums.
Overcome Your Weaknesses: Are you one who walks into a discount store or home improvement center and while scanning the shelves, you see things that you didn’t know you needed but now you can’t live without? Subliminal advertising preys on such consumers. It’s everywhere: electronic billboards, pop-ups on your favorite internet websites, Groupon and LivingSocial deals that clutter your mailbox. Simply ask yourself a few very elementary questions before succumbing to the purchase; “Do I use it regularly? Would I have bought it anyway? What consequence would there be if I didn’t buy it?”
Plan Ahead: When scanning your “savings plan,” what are the “big expenses”? Is it travel, clothing, groceries or dining out? Whatever surfaces, place the most focus on the larger dollar amounts. For frequent travelers, set up the one credit card that provides no or low fees for baggage, provides the largest discount for car rentals and hotels and offers the greatest amount of cash back or rewards options. For the avid vacationer, consider the concept of vacation home swapping. For the trendy consumer, remember that the wealthy and overindulged have contributed willingly to our local resale shops. For the self-proclaimed chef, food prices have made us think more about things such as cutting out meat one more day a week and possibly using food compost as a fertilizer in our gardens. If restaurants are more your style, pay attention to specials and consider water with dinner while saving cocktails and desserts for home.
Contribute to Society: Now more than ever to “go green” can even save green. It’s no longer just an environmentally conscious maneuver, it has become vogue. For example, the ban on gas consumption has forced us to think about biking, commuting or simply calculating our day to make our time on the road more efficient. Or you can try the more simple modifications such as turning down your thermostat when you leave for work and eliminating incandescent lighting by using more energy efficient alternatives such as compact fluorescent and LED lamps. While it is less personal, sending electronic cards, photos and messages can save you money, avoid the use of stamps and save the planet. For the gym goer, refilling your water bottle instead of purchasing bottled water has the same effect.
Some less convenient yet effective ways to save both money and the environment is by researching refilling locations for your detergents and household products, purchasing a tablet for your reading enjoyment and adding a programmable thermostat to control the heat settings in your home. All of which might have upfront costs, but in time they will pay for themselves and then begin paying you back.
Take the Time to Educate Yourself: No one has to tell you that the smartphone you carry doesn’t come cheap. But what you might not know is that your little device can save you money. You just need to know which free applications to use to make it start giving back such as GasBuddy, Airfare Pro, GPS Drive and Foodspotting, to name just a few. There are also countless websites designed to save you money such as retailmenot.com, craigslist.org and amazon.com.
During the next several months of presidential campaigning, we will be inundated with talk of our country’s finances and spending habits — a favorite topic for politicos of all persuasions. Try making it more personal. Let it be a call to action for you to take control of your own finances. It’s something worth considering.
FPA member Catherine M. Seeber, CFP®, is a Principal and Senior Financial Advisor with Wescott Financial Advisory Group, LLC, an SEC-registered, fee-only investment advisory and wealth management firm. Cathy also serves as the President of the Financial Planning Association (FPA) of the Philadelphia Tri-State Area Chapter.