How to Shop Smart and Stretch Your Inflation Era Budget
A combination of high inflation and high interest rates is challenging even the most frugal of shoppers. Whether we like it or not, we can’t reduce our shopping to zero. What we can do is make a plan and shop a little bit smarter so that we can stretch every inflation challenged dollar we have.
Evaluate Purchases by Cost Per Use
The more we use and item, the better the deal for the item. This sounds obvious and sounds like something that everybody does, but all you have to do is look in the average family’s kitchen drawers to know the truth. Most of us have drawers full of items that have one purpose, and only get taken out of the drawer once a year. How many times have you walked into a Williams & Sonoma, looked at a ravioli cutter, and thought, “hey I like ravioli! Maybe if I have one of these, I’ll make it more often”. Meanwhile, you’ve never made ravioli in your life, and your ravioli cutter stays in mint condition for the next ten years in your kitchen drawer never to be used again.
Focus the majority of your budget on things that you use every day. If you’re going to up the quality of an item you’re buying, again you are better off increasing the quality of every day items like bowls or glasses, than on a niche item that you never use.
This same principle also applies to time. Prioritize your spending on things that involve more time, or have a better cost per unit of time ratio. An activity that is 2-3 hours compared to another activity at the same cost for 1 hour is a far better use of your budget. By the way, that ravioli cutter? Perfect tool for installing window screens. Just by finding something beyond ravioli that it was good to use for, I doubled its annual utility. Still not a great purchase, but better than the once a year that it’s used for ravioli.
Spend of Experiences, Not Things
We are an increasingly material society. Advertisers have us chasing cars and clothes, and any number of other consumer goods. While this does stimulate the economy, it isn’t always great for the pocket book, clogs up the closet, and after a while isn’t even a footnote in our life. Do you remember of pair of jeans that you bought 5 years ago?
Yes, social media influencers are making a fortune taking selfies in front of mansions, private jets, drinking Cristal, wearing a $15,000 Rolex watch, and showing off the latest Louis Vuitton bag. Flashy, but not memorable. Better value is found in experiences. There is nothing wrong with saving your money for luxuries. It’s a better deal for you though to save for something that you’re going to remember five years from now. Where do you want to go? Who do you want to do it with? How many pictures are you going to take? Who are you going to tell? What do you want your experience to say about you? These are all far more interesting than an expensive handbag that’s out of fashion three months from now.
Shop Solo
There is nothing quite like peer pressure to get your credit card out and run it up like there’s no tomorrow. “You look so good in that outfit, you should get it” is just about all of the motivation you need to buy something that you didn’t budget for and probably can’t afford. Let me let you in on a little secret: NOBODY else gives a shit about your money problems, or your budget, or your financial discipline. All people are attracted to is the endorphins and dopamine being released in their brain while they help you shop. We become addicted to the attention that we get when we buy something new.
Want to maintain financial discipline and not find yourself broke when the bills are due? Shop by yourself. Take peer pressure out of the equation. You are perfectly capable of making shopping decisions on your own. When you don’t take your friends, you are less likely to be pressured into buying the dress in the window, or impulse buy on accessories. You are more likely to make a budget and stick to it. You won’t have to fight the impulse to impress other people by where you shop – Walmart and Old Navy instead of Nordstroms. When it comes to money, YOUR FRIENDS AIN’T SHIT!
Spend on the REAL You – Not the IMAGINARY You
When making your shopping budget, think about the things that you actually do, who you are as a person, and how you project that to the world. Do NOT get sucked into the fantasy of you would LIKE to be. Nothing makes you go broke faster than “fake it ‘til you make it”. Guys are really susceptible to this. Make luxury items the prize for something significant. Got a little bit of money? Now is not the time to drop 10Gs on a watch. Made your first Mil? THEN it might be appropriate to reward yourself for such an accomplishment. More likely? By the time you get to that milestone, you won’t care so much about a watch.
Success is bred by being authentic to yourself. Trying to be a hustler and faking out the world will be seen through. It won’t get you where you want to go and you will spend a small fortune and incur a boatload of debt for something that doesn’t make you better. Spend on things that already define you, your values, your priorities, and where you are in life. You can improve on these things incrementally, but the money aspect will be the last thing you change. Mindset and process first.
Ditch Overdraft Protection
Stop giving banks free money, they have plenty of it. There are thousands of unnecessary charges that can be racked up over the lifetime of your accounts. Overdraft protection is one of the worst. It is literally a tax on irresponsibility. If you are running your chequing account dry every month, the solution is not the bank allowing you to spend more. You need to get your financial house in order. Overdraft protection is like wearing a sign that says “HIGH RISK BORROWER”. Good luck getting a good rate on your credit cards, or getting a mortgage when it comes time to buy a house.
If you find yourself going broke every month, start living on cash. It will give you a visual representation of what you are spending, and what you have left. You’re more likely to pay attention to your financial health when there is something tangible to remind you of where you are. Put the credit card away and leave the debit card at home until you start sustainably living within your cash budget.
Don’t Grocery Shop on an Empty Stomach
As Jack Nicholson says in The Departed, “Don’t laugh, this ain’t reality TV!”
Most people wouldn’t believe how much extra money they spend at the grocery store just because they’re hungry when they go. Even psychologists have studied this phenomenon and recommend grocery shopping after meals. When you shop hungry you tend to buy 30-40% more groceries than normal, and you are the sucker that stores are looking for when they put impulse items at the checkout. Not only is this bad for your budget, it’s also bad for your health. Hungry shoppers are more inclined to shop in the centre of the grocery store for less healthy snack food items.
It's hard enough to stay on a grocery budget these days, don’t add to it by shopping hungry. Even a small snack before you go will relieve the psychological pressure of buying more food out of a perceived need to eat. Make a list and stick to it. If you find yourself chronically shopping hungry, find a way to change when you shop, or at the very least take something to snack on from home while you’re shopping. Nuts and dried fruit are particularly good for quickly filling the hunger gap.
Yes, inflation and interest rates are putting a strain on our budgets. These shopping tips will help you stay afloat. Sometimes it’s not about getting further ahead that will make us 1% more successful, it’s how we prevent money from running out the back door unnecessarily. Make a plan, stick to it, and pretty soon you will reap the rewards of your financial discipline!
