Many think of stewardship in relation to how much they give, and that is an important part of being a “Steward of Providence.” Just as important, though, is what we do with the rest of our money. It’s a funny thing, but as people apply sound financial principles they often become more generous, yet find that the remaining 90 percent goes further than the 100 percent they had before.
Spending According to Your Plan
How is that? It’s because now they’re giving in the context of an overall financial plan, and in the process, they become wiser in terms of how they spend their money. Here are a number of smart spending habits to develop that will help you become financially free.
One of the most important habits you can develop is to spend according to your budget. That means you need to have a plan in the first place! Impulse buying is an enemy of financial freedom, especially when it relates to big purchases, or even when smaller purchases turn into regular habits — do I hear anyone saying “Latté”? Again, let’s strive for balance in this area. It’s a good thing to budget an allowance for you and your spouse that you can spend without having to give an account, a so-called “impulse” budget. That type of impulse buying isn’t the problem. The problem arises when spending based on impulse is the norm rather than the exception. Those of you with children know how often they have difficulty controlling their emotions when it comes to wanting something. Just consider little Johnny in the grocery-store cart when mom rolls past the candy bars at the checkout counter!
Fortunately, we do tend to mature a bit as we get older, but we may still find it difficult to control our spending at times. We all have a little bit of “kid” in us, don’t we? We’d rather not think ahead about the consequences of our impulse buying. But let me tell you something: Chances are that how you spend your money will be a greater determining factor in your becoming financially free than how much you make in the first place.
Looking Ahead
Another factor to consider when laying out your spending plans is to learn to anticipate your needs. Seasonal purchases are a great example. If you know you’ll need a winter coat, don’t wait until the first frost to buy it. You’ll pay a premium, whereas you could have spent much less by purchasing it as part of the prior year’s winter closeout sale.
One of the great disciplines the Church offers that can help you master impulse buying is fasting, typically understood as the taking of only one full meal in a day. Section 2043 of the Catechism says that fasting “helps us acquire mastery over our instincts and freedom of heart.” Learning to acquire self-mastery is just what we need! While fasting is a requirement on Ash Wednesday and Good Friday, there’s no reason we can’t use this powerful tool more frequently. I know a number of people who choose to fast in some manner on a weekly basis. You’ll find that your character and will are strengthened, and that you make better spending decisions.
Comparison Shopping
Another spending habit to develop is to become a comparison shopper. This is important for major purchases that occur only once in a while as well as for day-to-day expenses that add up over the course of a year. Major purchases include such things as your home, automobiles, education, home improvements, and various insurance policies. Each of these items has a relatively high cost, so saving 10 to 20 percent or more becomes a substantial sum very quickly. You’ll always want to take the time to gather adequate information about these bigger items so you’ll be confident that you’re getting a good deal.
Let me give you an example from a few years back when I bought a new car. After settling on the vehicle that made sense for us, I utilized the online (and free) services of www.kelleybluebook.com. I also purchased a new-car price report for our desired model from Consumer Reports for a cost of $12. This report was invaluable because it provided not only the dealer invoice price, but also the Consumer Reports Wholesale Price. This provided the amount of any rebates the dealer expected to receive from the manufacturer. The Website of the manufacturer came in handy as well, since it showed me the dealers that were within a reasonable range of our hometown. I e-mailed the closest 15 dealers with the details of the car I wanted, including options. Four dealers responded, and one of them submitted what, in my view, was a fair offer. I then made an appointment with the dealer and we were done with the paperwork in less than an hour. It was nearly painless, and I’m confident that I saved a few thousand dollars compared to what I would have spent had I not completed the background work.
When it comes to major purchases, the value in comparison shopping is clear. However, people often let their guard down when it comes to smaller items. Examples include groceries, clothing, meals out, entertainment and recreation, and gas for the cars. Even though these purchases are relatively small each time you make them, the cumulative amount ends up being substantial over the course of a year and can have a detrimental effect on the bottom line of an annual budget. You’ll want to be a comparison shopper on these things, too.
For those of you interested in making your dollars go further, Amy Dacyczyn has become one of the true experts at living a frugal lifestyle. While not all of her suggestions will be for everyone, I highly recommend her book The Tightwad Gazette, which is an invaluable resource for those families wanting to stretch their resources. Amy developed what she called a “price book,” which can be a great saving tool for your family. The price book was originally created to monitor grocery costs, but you can use it effectively for other items you purchase regularly as well. It includes space for you to note the price per unit you pay for the items at various stores at different times. As a result, you end up knowing the lowest price you’ve paid for that item in the past and whether the store is presently offering a good deal. If it is, you can stock up with confidence. This kind of smart shopping will allow your hard-earned dollars to stretch.
It’s easy to get excited over the savings offered by grocery coupons, and they can provide valuable savings. But that’s not always the case. If you use coupons blindly, you’ll fall into the trap of paying more to buy well-known brands, and may not recognize that another store may offer the item at a lower everyday price than the store with the coupon. The only way you can truly know a good deal is to track the prices of the items you buy most often, and the best way to do that is with the price book. I know in our case, we have found that different stores tend to consistently offer lower prices on certain items. One store offers a great deal on dairy products, and another is best when it comes to produce. We tend to rotate among about four stores in our area to maximize our savings.
Phil Lenahan is Director of Finance at Catholic Answers and author of Catholic Answers’ Guide to Family Finances. If you have a question you would like Phil to address, contact him at plenahan@catholic.com.
