We had a great guest speaker last night, Laura Zander (Owner of Jimmy Beans Wool), in my personal branding class. She gave us the low-down on how she started her company. Even though the class is based around social media, she spoke on many topics. I think she’s particularly amazing because she has grown Jimmy Beans Wool from nothing into a +6 million dollar company within 10 years with no business education. As I listened to her story, it became apparent to me that a lot of her success is due to frugality. She gave an example that the table they use in the back of their store is one her husband bought from a garage sale when they first opened. They use this table to write on, and while it might not look the best, it still serves its purpose. Why would they buy a new one while this one’s still standing? There is no doubt in my mind that this mentality (along with other personality traits) is why Jimmy Beans Wool is as successful as they are.
Anyone reading this post is probably fairly good at practicing frugality, but I think we can all use some reminders every now and again. If Laura can own a successful yarn company and stay frugal, so can we. It amazes to me how many people have good paying jobs, but they have no savings. My friends are always telling me about the next cool thing they are going to buy, but (from an outsider looking in) I can tell it’s probably not the smartest thing for them to do. Here is my question to you: When is it appropriate to help (give advice to) your friends on their purchasing habits and to what extent? I’ve felt like slapping a few of them across the back of their heads when they tell me what they’ve bought. I know everyone’s different, but there is no way they can think buying a project car is a good idea when you can barely pay your bills. The easiest thing to do would be to do nothing at all, but it’s hard to sit back and watch people you care about make terrible financial mistakes. I’ve tried explaining personal finance management to them, but it rarely changes their minds. We all want our friends and family to make smart financial choices, but how do we force them to do so when I know we can’t.
When the topic of smart purchases is talked about, most people start thinking about big purchases like a new car or a house, but I think it’s harder to manage your micro purchases. If you’re going to buy a house (hopefully) you’ll spend a lot of time researching it so you can make a smart, informed decision. On the other hand, when you go to the grocery store how many times have you added items to your cart that you didn’t plan on buying? Dealing with micro purchases is definitely one of my weaknesses. I can’t tell you how many times I’ve gone to the store for a few things and ended up with a whole cart full. None of the items were things I needed. I just wanted them at the time (which is why grocery shopping while being hungry is bad!). After doing the math, these small items add up. People always talk about the importance of a shopping list. While I think they have value, I think it’s more important to be able to use self-control while you shop. You can pick up extra items every time you leave the house (stopping by Starbucks, or buying a candy bar at the gas station) and you won’t always have a list. Being able to tell yourself no is a crucial part of having a successful financial future.
There are tons of examples of the importance of frugality, but what’s the best way to stop these unnecessary purchases? Here are a few things I do (this isn’t expert advice by any means, just a few things I’ve found that have helped me):
1) Turn on your blinders: When I go shopping I try to already know exactly what I’m going to buy. This way I don’t need to look around (less temptation) the store. I’ll walk right up to the sales person and ask them where the item is. I especially use my blinders at the cash register. I try my hardest to focus on the cashier so I don’t see the delicious candy bars sitting right next to me!
2) Limit the time you have to shop: I like to go shopping when I only have a limited amount of time. One way I like to do this is go shopping before I have an appointment. If I only have an hour to shop and return home to drop the stuff off, you bet I’ll stick to the list. Another creative idea (if you have a dog) is to not take them potty before you leave to go shopping. This way you’ll be in a hurry to return home, because no one likes to clean up accidents!
3) Make Yourself Feel Guilty: Before I buy something, I like to think about all the bills I have to pay. I find that the guilt I feel for buying things I don’t need will usually prevent me from making the purchase.
4) Take away the excuses: One of the reasons we used to eat out a lot was because I could justify it by not having food at home. We used to wait until we had eaten everything before going grocery shopping. I’ve found we eat out less if we go grocery shopping more often. We still buy the same amount of food over the month, but we just make sure we are stocked up. I no longer have my favorite excuse to eat out.
Do you have any advice on preventing unnecessary purchases?
April 11, 2012 at 12:56 PM
Hello there Mr. Neighbors! This is yet another thought provoking post that you’ve put together!
Hmm, not so sure about how to get friends to stop making poor buying decisions. However, here’s a nice tip to help anyone who’s already focused on being frugal avoid buying more than you planned on buying – go shopping without a shopping cart.
This way you will only be able to carry what you can fit in your hands, which forces you to stay focused on buying only the items on your shopping list.
April 11, 2012 at 5:17 PM
That great advice. Now that I think of it, I know I’ve bought less when I didn’t have a cart.
Young Mom Life
April 12, 2012 at 11:26 AM
Now this.. this idea is fantastic. My only problem is the little girl who goes with me. *wink* But it is good for when she isn’t there.
April 12, 2012 at 11:31 AM
You really wouldn’t be able to buy much with a child in one arm and a gallon of milk in the other! Ha
April 12, 2012 at 12:36 PM
Hi YMD, thanks!
And you’re right it’s really tough to make this strategy work when you’re not by yourself. But like you said you can really clean up on savings when you time this right.
And like Chris said, if you do it on a full stomach and when you have to be somewhere else in a few minutes the savings just fall right into your lap!
April 11, 2012 at 6:36 PM
I always go shopping with a list.
April 11, 2012 at 7:13 PM
I do too. The only problem is I don’t always stick to the list!
April 11, 2012 at 8:41 PM
My microspend issues aren’t on groceries. That is an area that I have delegated to my wife and she goes to the store on a full stomach and gets no more than what we both approve on the list.
My issue is when I’m at work or out and about. This last week I blew so much money and small expenses that it isn’t funny. However, to combat that I’ve started using this web based app called Joe’s Goals. Its a neat little app that helps you keep track of how you’re doing when you’re forming habits. Every time I screw up in that area I give myself negative marks. I also have a spot on there for positive points when I refrain from spending. I can access it through my PC or my phone’s web browser. I didn’t build the tool, but it sure has helped me out in the last few days that I’ve been testing it out. The URL is joesgoals.com
Chris, I apprecate everything you write about finance. Have great one, man.
April 11, 2012 at 10:02 PM
That app sounds great. I’ll have to check it out. I’m the worst at gas stations. I’ll go in for 1 thing and walk out with 10! Thanks for the advice.
Young Mom Life
April 12, 2012 at 11:25 AM
I.. have to said I’m not that great when it comes to sticking to lists or saving to be quite honest. To make sure I stick with it, I tend to either:
1. Remember a goal we are saving for (If I buy all this extra food, I can’t go see that movie I wanted to with my husband!)
2. Buy frozen things/cold things first. If I put something frozen in my cart, I remember it needs to STAY frozen or cold. I freak out most about milk, but that’s because I have a fear I am going to drink rotten milk or something. *laugsh*
But I will definitely take your advice. It will definitely end up helping.
April 12, 2012 at 11:29 AM
I’ve never thought about getting frozen items first. That would be motivation for shopping quickly.
April 12, 2012 at 11:23 PM
good post, everyone has different spending habits. Buy what you can afford, never overspend! One thing I go by is never buy something for the full price. There are always things that go on sale or coupons. Track the prices and scour through flyers for good deals.
One of my guilty pleasures are buying online Groupons… sure, it’s at a heavy discounted price, but do I really need to go to fine dining for half price? Probably not… sometimes, you have to indulge yourself. I can never pass up a good deal!!
April 13, 2012 at 10:53 AM
I’m glad you wrote this article when you did. I’ve been keeping myself from buying a lot of things since I tend to move around a lot. I keep saying “the less you buy the less you have to move”. Lately it’s been harder because it’s been five years… and damn… I want a sofa! But this is great! I also do want to try out that Joe’s Goals. That sounds intriguing.
As far as convincing friends to follow suit: You just have to do it yourself and show results. It’s all about living by example 😉
April 14, 2012 at 7:59 AM
Really good post. I’ve given mine and my partners finances an overhaul and as result we’ve been able to save more money than ever before. One key area that I’ve curbed on is random weekly spending. We each have £35 for the week to spend on anything we want outside of food and household items (that is already budgeted for).
I go to the cashpoint every Sunday and give him £35 and myself £35. That is all we are allowed. We jokingly call it ‘pin money’. We’ve done it now for 2 months and have had a lot more money left at end of month to save/spend on jobs that need doing round the house. It has helpled to focus our attitude to spending much more than anything else we’ve tried!
April 14, 2012 at 9:53 AM
I know people that also give themselves a weekly allowance for “fun” money. It’s crucial to use cash. It’s just too easy to swipe a card. Thanks for the comment and thanks for the advice.
April 19, 2012 at 4:16 PM
Great post Chris. Your comments about your friends’ spending habits ring bells for me! I was an overpsender and know that several of my friends tried to help. I was not open to it at that stage. Also advice such as, freeze your credit card into a block of ice etc didn’t work! I also know that often when I get clients, who have been referred by family members, accountants etc, my counseling doesn’t help until they’re really ready!
My advice, make sure they are reading your blog and learn about services such as The Financial Recovery℠ Institute, where they can go for help when they’re ready!
April 19, 2012 at 4:17 PM
I will make sure they know about it. Thanks for the advice!