How to Spend Smarter
Spending nothing at all would be a great way to maximize savings if we didn't get hungry around dinnertime. There are hundreds of money-saving strategies designed to find hidden dollars, but how you spend them is discussed less often. You may be able to create wealth through smarter spending habits.
Consider Cost Per Use
The value of a purchase can be defined in different ways. Considering the initial cost alone doesn't give you the full picture. Compare a modest wedding dress to a business suit: Perhaps both cost $500 to buy, but the dress is worn only once, while the suit is worn once weekly for a year.
On a per-wear basis, that's $500 versus less than $10 per use. Considering the cost per use of an item can also justify spending more for better quality, if that improved quality extends the life of your purchase.
Some purchases can be justified on the basis of "buying time." A tablet purchase may, for example, permit a commuter to make more productive use of time while sitting on trains or buses every day. He or she can use that time preparing for the workday or organizing other aspects of his or her life.
Furthermore, buying a slow cooker results in less time spent in the kitchen. Dinner is cooking at the same time the commuter on the train is catching up with emails on a tablet — resulting in some serious multitasking.
Invest to Create Corollary Savings
The slow cooker analogy demonstrates another benefit of a smart purchase. Use of this purchase may also free a family from its dependence on prepared or fast food —naturally creating a smarter spending plan for the household grocery budget.
Similarly, buying a coffee press and quality beans may improve satisfaction with your own coffee, thus reducing your daily dependence on the pricey creations of your local barista.
Consider Resale Value
Whether or not you plan to sell an item after using it for a certain time, it's smart to consider its resale value at the time of purchase. This is a common strategy for some car shoppers, who consider brands and models that typically resell for a greater percentage of their purchase price than others.
Consume Now, Pay Later
The culture of instant gratification and easy credit often favors retailers in the spending battle, which often leads to debt on the part of buyers. Borrowing money to purchase items instead of saving up for them puts the burden on the consumer to repay an expensive loan or to carry credit card balances. And, if payments aren't timely made, the actual cost of the purchase continues to go up through added interest.