Personal Finance

8 Tips to Become a Smart Spender

We work hard to earn our money so we definitely deserve to spend it whichever way we want right?   Perhaps, but we should think ahead and learn to become smart spenders of our money.  We learn how to be a smart spenders in order to keep more of the money we earn. When we become smart spenders we are able to keep more of what we earn so we can save for rainy days, invest in stocks, or have enough to pay our expenses such us our mortgage.

Please note that before we spend our money it is important that we pay ourselves first, I have written about it in 8 Lessons from the Richest Man in Babylon.

Becoming a smart spender is a great way of controlling our money. Let’s look at 8 simple ways we can become a smart spender and utilize the power of smart spending at our disposal.

1.   Say No to Plastic


We live in an economy that thrives on credit, however it’s the same reason why we’re stuck in this rut. The average American family is about $16,000 in the hole due to credit card debt. When it comes to smart spending, cash is always king!

We should avoid using credit cards for every day purchases at all cost.  The reason for this is that it is very hard to keep track of how much we spend.  When we use cash we have to stop when we run out.  When we use plastic, we think less of how much we spend and we end up spending way more than we intended.

If you end up using your credit card, make sure you check your statement after every purchase you make. Using cards obfuscates our spending and we end up questioning ourselves how we managed to spend $500 last weekend.  We must always make sure to pay off our credit card balance in full every month. The rule of thumb is that if we cannot pay off our credit card balance after every month, we cannot afford it (an indicator that should tell us to cut back!).

Another workaround from using a card is using a debit card instead, it is synonymous to cash since you are in actuality spending the cash you have in your bank with no added surprises at end of the month.

If you must have credit card avoid the major credit card companies since they care less about you and can charge upwards to 25% (or more if they want to get you) on the interest. Instead, open up a credit union card which by law cannot charge more than 18% of interest!

Another rule of thumb on credit cards is less is more, open up only a maximum of two credit cards. Avoid opening up department store credit cards since they have the worst interest rates out there.

2.   Learn How to Shop Around


Patience is virtue. You may want to immediately buy something you need from the first store you land at, but learning how to be patient and checking out at least two other nearby stores before making the purchase decision is smart. Different stores often sell the same products at different prices. If we’re smart about it we can take advantage of a special discount or sale going on at the store for perhaps the same product we are intending to buy. Also, don’t forget that used or slightly refurbished items can often be purchased at 60% of their original value. A small scratch on the dishwasher or the Blu-ray DVD player is not a big deal as long as the device works.

Another great way to shop around is by comparison shopping with online stores.  Utilizing our smart phones (I use my Iphone), we can now comparison shop and see whether the brick-and-mortar store prices compare with buying it online. Often times buying online makes sense (especially with free shipping).  Check out the Amazon app or RedLaser  which actually let’s you scan the UPC bar codes of products to let you check out the cheapest prices online! I find it handy when I am walking around the department stores to comparison shop versus online stores.

3.   Don’t be a Spontaneous Shopper 


We may want to make purchase decisions in the “spur of the moment,” but this often leads to buyer’s remorse later on. It’s even worse if you are low on cash at the end of the month because you couldn’t previously control yourself at your favorite store.

That’s why you have to learn how to be a mature shopper and give yourself some time, say three days, to make a big purchase. This will let you evaluate the importance of the purchase and realize its priority in the larger scheme of things.

One way to avoid spur of the moments purchases is to defer it.  Often times we can say to ourselves, I’ll wait until next time. Chances are you may not want it anymore. If you still do — it’s best to shop around for the best deal (see #2).

4.   Buy in Bulk When Appropriate

Grocery cart

If you find certain products that you regularly use on sale, don’t hesitate to buy them in bulk. Stocking up on such items will help cut down expenses you will incur down the road buying the same products at a higher price. We can do this with foods that have a long shelf life and even clothes or cosmetics.

When we stock up on items that we know we use regularly (ex. toilet paper, canned goods), we can ensure we get the best prices.   Stores like Costco or BJ’s are great places for bulk shopping, although we must be careful when buying in bulk stores. We have a tendency to make spur of the moment purchases for items we don’t really need. A way to combat this is to list items you know you regularly use so you can buy only those items and nothing more. Also buying online for bulk items is a great idea.

5.   Track Your Expenses

A great website for tracking expenses and keeping a budget is It’s free and easy to use!

This is probably one of the most important aspects of becoming a smart spender. It may be difficult to be a smart spender until and unless you know where you’re spending your money. So you can either simply use a pen and piece of paper to jot down your daily expenses or use any software that can help you maintain a record. Then at the end of each month, closely review the sheet and you’ll be surprised to see how many unnecessary expenses you have incurred.

6.   Learn How to Budget

big_spenderAfter you have a snapshot of how much you spend on a monthly basis, you’re in a better position to make a comprehensive budget. You can see how to meet your expenses and still end up with some cash in hand at the end of the month. For example, if you enjoy renting DVDs which costs you up to $30 per month, you can purchase membership at any website that lets you watch the same movies at as less as $10 per month. This may not seem like a lot of savings initially, but you can end up saving up to $240 per year by making just one smart spending decision.

A great site for tracking money and setting up a budget is which many have already started using.  And it’s free so check it out!

7.   Calculate Cost per Use


It is vital to gauge the worth of any product and how often we will use it before making the purchase decision. Say you like to ski occasionally. This doesn’t mean that we purchase all the skiing equipment we find under the sun because at the end of the day, if we ski three times a year, it would make more sense to rent the equipment rather than to buy it.

When we calculate the cost per usage we can calculate whether it is a good use of our money to buy the product or to rent or borrow.

For example, if we go to the gym and only use the treadmill it might make sense to buy one at home (pending we have space for it) rather than getting that gym membership.

8.   Don’t Make Redundant Purchases


Have you ever shopped for an item and realize later on that you already have one at home? We may often forget about things after a few months of purchasing them if we don’t use them regularly. Items such as coats or gloves that are only used in winter are usually put away in the basement or attic, only to be used again next season. By the time winter comes around next year, chances are that you’ve forgotten about your winter apparel and are lured into your favorite store by the clearance sale it has just put on.

Avoid making this mistake. That’s why it is always a good idea to check what we already have. This helps us avoid purchasing the same item twice and we save ourself from incurring unnecessary expenses.

A way to do this is to regularly organize our stuff as much as we can and before we go off purchasing items that we think we “need” we should double check that we do not have one already that is still good to use.  In addition, we should consider donating items that we no longer use to help minimize the clutter in our homes. When we minimize the clutter we become more knowledgeable (and appreciative) of the things we do own.

Now that we have these 8 simple ways to become a “smart spender“, let’s remember to start implementing them in our life starting today!

Founder of