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?
Chris Neighbors 