How To Defeat Common Merchandising Tactics and Save Money

The lifehacker.com website recently posted an article titled 10 Sneaky Ways Retailers Fool You Into Spending More.  It educates consumers about the merchandising tactics retailers use to increase purchases so consumers will not be manipulated by them.  Awareness is a fine thing, but six months after having read the article, will you still remember those merchandising tactics, let alone have an appropriate level of awareness to resist them the next time you enter a retail store? It is not likely.  You need more than awareness; you need a routine.

Personal finance routines prevent impulsive spending

You can permanently inoculate yourself against retail merchandising tactics intended to get you to spend impulsively by practicing a few basic personal finance routines.

  • Set short and long range financial goals.  Goals keep you focused.  When you are focused, you are less likely to be influenced by merchandising tactics.  If a purchase does not advance you toward the attainment of your goals, why spend money on it?
  • Identify financial priorities.  A firm knowledge of your priorities keeps you focused on what is most important to you.  You are less likely to be distracted by merchandising tactics designed to get you to spend frivolously on low priority items.
  • Create and maintain a budget.  A budget is a spending plan; you spend your money on paper before you actually spend it.  If you have already spent your money on paper, merchandising tactics will not tempt you to spend impulsively, because there is nothing left to spend.  If an item is not in the budget, it does not get purchased.
  • Make a detailed shopping list and stick to it.  A shopping list is your plan for your trip to the store.  Stick to your plan, and merchandising tactics will fail to influence you to overspend.  Never enter a store without a shopping list.

Practice these personal finance routines and you will be your own person when you roam the retail stores.  Merchandising tactics will fail to influence your spending.

K. C. Knouse is the author of True Prosperity: Your Guide to a Cash-Based LifestyleDouble-Dome Publications, 224 pages

The Most Important Part of Personal Finance Has Nothing To Do With Money

While personal finance primarily deals with money management, the most important aspect of personal finance has nothing to do with money. I am talking about your values, your perceptions of what is most important in your life. Your values are the yardstick by which you measure to what extent you are succeeding or failing at life. Values determine your priorities. Priorities drive the decision-making process. Decisions regarding spending and investing are at the core of personal finance. If you find you are having trouble getting your finances under control, your values may be the root of your problem.

Where do values come from?

You derive your values from your parents, religious background, ethnic culture, society, mentors, and experience. For example, if your religious upbringing emphasized giving, you may value donating your time and money to charitable enterprises. When you cannot give as you think you should, you feel guilty. While we know where values come from, it is not always obvious how you came to have a certain value. For instance, if your parents were frugal, you may value saving as an adult, but not necessarily. You may resent your parents for not spending more than they did when you were a child, and as a result, you value consumption instead of saving. Your experience with frugality was negative so you adopted the opposite value.

While we know where values come from, it is not always obvious how you came to have a certain value. For instance, if your parents were frugal, you may value saving as an adult, but not necessarily. You may resent your parents for not spending more than they did when you were a child, and as a result, you value consumption instead of saving. Your experience with frugality was negative so you adopted the opposite value.

Values can change.

No matter what your upbringing or background, your values can change. Those things that influenced your values during your youth continue to influence your values throughout your life. Say you value consumption, but over time, consumption leads to financial hardships, and this causes you to value frugality later in your life. People often value money over time early in life as they perceive they have less of the former and an abundance of the latter. As they age, they may come to value time over money.

What values are compatible with successful money management?

Here is a partial list of personal values that are compatible with successful money management: abundance, balance, confidence, control, discipline, economy, financial independence, flexibility, freedom, frugality, individuality, industry, investing, optimism, order, organization, patience, prosperity, prudence, self-control, self-reliance, and thrift. If you possess many of these values, you have what it takes to be successful in personal finance. You may only need some guidance or tools to gain control over your money. If you possess values that are incompatible with successful personal money management such as expedience, status, and/or conformity, you will probably find it difficult to be successful at personal finance until your values change.

What are your values?

The important thing is to examine your values. Some may be obvious to you, others may require some digging. Honest answers to the following questions can help you begin to identify some of your values.

  • How do you spend your time?
  • How do you spend your money?
  • Who are your friends and what do they value?
  • What do you do for a living and how do you feel about it?
  • What motivated you to purchase the particular make and model of the vehicle you own?
  • What motivated you to purchase the particular house you own?
  • How do you feel when a close friend receives a financial windfall?
  • How do you feel when your neighbor purchases a new car?
  • How do you finance large purchases?

You can change your values

If you find that some of your values are incompatible with successful money management and this is hampering your ability to gain control over your finances, there is hope. You can change your values. You do it by substituting a value that is compatible with successful money management for one that is not. For example, substitute discipline for expediency or thrift for consumption. Now make that new value a part of you by taking action that reflects the new value. For example, act on the value of discipline by saving a portion of each paycheck. Repeated action that reflects the new value is the key to successfully changing your values. Compatible values form the foundation for successful money management.

K. C. Knouse is the author of True Prosperity: Your Guide to a Cash-Based LifestyleDouble-Dome Publications, 224 pages

Americans Face a 60% Chance of Financial Shock

What would you do if you experienced lost income due to unemployment, illness, injury, death or a major home or vehicle repair? Would you have the financial resources to pay the bills until you could recover without running up additional debt or raiding your retirement savings?

Recent research by the Pew Charitable Trust into the causes and effects of personal financial shocks says you will probably come up short: A survey of 7800 households found that those with income below $25,000 have enough savings to cover only six days of living expenses; those with income in excess of $85,000 have enough savings to pay for forty days of living expenses; those with income in between the two extremes cannot pay for even one month of living expenses with savings on hand.

Financial shocks more likely than you think

Okay, so you are one of those who do not have enough money in savings outside of your retirement account. That will be bad if you have a financial shock, but what are the chances of that happening? They are better than you think. The Pew survey found that 60% of respondents had experienced a financial shock, lost income due to unemployment, illness, injury, death or a major home or vehicle repair, within the last twelve months. Those are 3 to 5 odds. It is more likely than not that you will be a victim of financial shock, not just sometime in the distant future, but within the year.

Now consider that this survey was taken recently, long after the economy had recovered from the Great Recession of 2007. What do you think the odds of experiencing a financial shock will be when there is another economic downturn? Given the likelihood of experiencing a financial shock, can you honestly afford to put off accumulating the savings necessary to deal with it? Not if you value financial security.

How to prepare for a financial shock

Start by putting some money each pay period into an emergency fund. This is money you will use to pay the bills in the event of a loss or interruption of income due to a layoff, job loss, illness, or accident. Keep this money in a money market account so you can access it quickly when you need it. In addition to the emergency fund, set aside some money each month for home and auto repair and maintenance and appliance repair or replacement. Keep this money separate from the emergency fund. Accumulate it in a money market account so you can access it quickly in the event of a repair or maintenance expense. If you have a high-deductible health insurance policy, save in advance for the deductible each month in the same way you save for repair and maintenance expenses.

Accumulate money in the emergency fund until you have enough to cover at least three months of living expenses (six months would be better). The balance in the repair and maintenance savings account will fluctuate as you use it to pay for expenses. Continue to fund it each month.

How to fund your saving accounts

Where will the money come from to fund these savings accounts? Create a budget that sets aside money to fund the savings accounts first before there is any spending, then cut out or cut back on low priority expenses to balance the budget. Read the three-part series on creating a budget: Confronting Financial Reality, Part 1, Part 2, and Part 3.

The odds favor you having a financial shock within the next twelve months; do not fight the odds. With an emergency fund and savings accounts for repair and maintenance and medical deductibles in place, you will be in a position to survive a financial shock with your finances intact.

K. C. Knouse is the author of True Prosperity: Your Guide to a Cash-Based LifestyleDouble-Dome Publications, 224 pages