Budget Like a Hero - 8 Do's and 2 Gotcha’s
- June 30, 2020
- by Michael
Recall that utility is the overall usefulness you get from a purchase. By paying attention to utility vs looks or price you’ll always be sure to get the biggest bang for your buck. Maximizing utility is essential to staying on budget, meeting your financial goals, and growing your net worth. Anybody can do it. Here are nine tips you can use to save money.
The theory of economic utility assumes that a person always has a fair selection between items and knows everything about those items. In reality, we don’t always have the luxury to spend a lot of time shopping around. It takes work to research a product and know what is a good deal.
1) Set a budget
Set a budget but don’t go into a purchase decision trying to max it out. Come in under budget if it makes sense.
2) Don’t get emotional, be logical
Step back from the various emotions that tug you toward the cheap or expensive option.
3) Do you really need it?
Consider how the purchase fits into the bigger picture of life including the time spent using it and maintaining it. Will this thing collect dust or will it be used daily?
4) Do your homework
Research the product, read reviews - especially for big ticket items, but be skeptical about what you find. It is better to look through the 1 star reviews to get an idea of what can go wrong.
Online review systems can be gamed and it is really hard to tell what is real anymore. Consider that the Reddit community hijacked the review thread for this Banana Slicer and put some really crazy stuff in there.
5) Price compare
Type the product into Google, click on the Shopping link and compare prices across Amazon, Walmart, and dozens of other sellers).
Shopping around can even be done for cars at services like TrueCar.
6) Factor in Shipping
Go for the lowest price + shipping deal.
7) Wait if you can, then POUNCE!
My wife and I say we “wait, wait, wait, then POUNCE” when we see the right deal.
If you are buying used and have the time, let the market come to you.
8) Purchase “off season”
Try to anticipate your needs several months in advance. If you don’t need the item urgently you’re more likely to get the best quality for the lowest cost. For example in November you won’t get a good deal on a winter coat, but in May stores are looking to clear out excess inventory.
Even if you follow these tips and budget like a hawk there are a couple ‘gotcha’ situations that can be so frustrating.
1) Being forced into a purchase due to an unexpected event really hurts the wallet. Consider booking a flight at the last minute or showing up at a car lot with a broken down vehicle and no way to get home. At that point you are paying retail, which is what you want to avoid.
2) When you really need something, and the store normally stocks several kinds, but only one kind is currently in stock. That means everybody else picked the better options and you are stuck with the worst one. This happened to us with a humidifier when our child was sick (the thing was an overpriced piece of junk).
Anticipating your needs is the best way to minimize these situations. Budgeting is about planning ahead. My wife and I keep a list of big ticket items that need to be purchased in the next year or two with estimated prices. This is stuff like car tires, furniture, appliances, an instrument for one of the kids, etc. When I see a sale come along I feel justified to “pounce” on the good deal since I’ve followed the tips above.
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