Personal Finance

The Secret to Spending Less

Economists view the Commerce Department's report today that consumer spending rose in July as encouraging -- considering consumer spending accounts for about 70% of the nation's economic activity. You might say it's a good thing Americans aren't pinching their pennies quite so much.

Some of that spending came at the expense of saving, though. The personal savings rate as a percentage of income fell to 5% in July from 5.5% in June. Considering many Americans' savings have taken a hit from stock market gyrations or have been drained to help them get through a job loss, it's worth looking at your spending to see whether you need to cut back to boost your savings.

I've found that one of the best ways to reduce spending is to avoid temptation. The fact that I live in a small town probably makes this a little easier for me than for big-city dwellers, who can't walk down the street without passing a multitude of stores, restaurants and entertainment options. (Plus, smaller cities tend to have a lower cost of living -- and in our top ten picks for best value cites , there's a lot to do at affordable prices). But even in the boonies where I am, we still can hear the siren song of daily deal sites, social media and e-mail alerts from retailers.

One of the most well-known daily deal sites, Groupon, doesn't operate where I live. So I've never been tempted by one of its offers for 40% off an hour-long massage (aah, sounds so relaxing) or 50% off an elegant dinner (wow, my husband and I could go on a date!). But my inbox fills up daily with all sorts of offers for deals on clothing, furniture, travel and more.

I signed up to receive some of these e-mail alerts to test them out for this column. However, I get the bulk of these e-mails because I managed to convince myself that by signing up I would be gaining access to great money-saving deals -- when, in reality, I'm just being lured to spend more than I normally would. As Kathy Kristof wrote in Stop Wasting Your Money in the May issue of Kiplinger's Personal Finance magazine, "No matter how much it's marked down, it's not a bargain if you normally wouldn't buy it."

To avoid the temptation to spend or to pounce on deals that really aren't, follow these steps.

Quit the daily deal habit. All it takes to stop tempting yourself daily with deals on things you probably don't need is to hit the "unsubscribe" link at the bottom of the e-mails you receive from deal sites. A friend recently invited me to join a daily deal site for designer clothes, and I did. But after one day, I realized that I didn't need the temptation. So I unsubscribed. I know it's harder to break a long-standing addiction you've had to a deal site. You're thinking: What about all those savings I would be bypassing? Try crunching the numbers first, though, to see how much you're actually spending each month on so-called deals.

Don't give out your e-mail address. Ever notice how the sales clerks at almost every store now ask you for your e-mail address when you buy something? I usually respond by asking, "Do you need it?" The answer is always no. They want your e-mail to notify you of sales and to lure you back into the store to spend more.

Say no to the "spend-more-to-save-more" pitch. Some stores have loyalty programs that reward customers with discounts after they spend certain amounts. At a particular children's store, I often hear that I need to spend another, say, $10 to earn a coupon for $25 off my next purchase of $50 or more. So I'd have to spend at least $35 more just to save $25 ($10 on that day's purchase plus $50 minus $25). No thanks.

Don't "like" retailers on Facebook. Sure, if you "Like" a retailer or establishment on Facebook or follow it on Twitter, you'll be privy to coupons and other special offers. But if you log onto these social media sites daily, you'll be getting constant reminders to buy things you probably don't need.

Stop the flow of catalogs. Those glossy images of well-decorated rooms and well-dressed people can be tempting. Call up retailers you've purchased items from and ask them to take you off their catalog mailing list. And register with the Direct Marketing Association to remove your name from its mailing list to stop new catalogs from arriving.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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