Question: How can I cut back on my spending?
Answer: Deloitte Knowledge Company and the Harrison Group recently released their 2010 American Pantry Study, and it contained some very interesting findings. This study took place against a backdrop of continued economic weakness and high unemployment, so the results are not unexpected. That said, if these attitudes and habits take hold over the longer term, it may portend good news for family finances, and even for our general spiritual well-being. Here are some of its key findings based on its survey of more than 2,000 consumers:
- 93 percent expect to continue spending cautiously even when the economy improves.
- 89 percent feel they have become more resourceful because of the economy.
- 84 percent have become much more precise in what they buy.
- 81 percent find it fun to see how much they can save with coupons or loyalty cards.
- 55 percent of those cutting back suffered no decline in income, but simply felt they “should be” cutting back.
The Deloitte and Harrison group study reveals that Americans aren’t just sitting by passively during this slow economy. Instead, they are changing behavior in order to focus on important financial priorities.
Prepare to save
If you want to successfully navigate this challenging economy, managing your spending well will be one of the keys to doing so. Here are five time-tested steps you can take to be a smart spender:
- Have a spending plan and spend according to the plan.
- Comparison shop.
- Don’t get caught up with expensive brands for the wrong reason.
- Recognize that buying “used” can stretch your budget.
- Sleep on big spending decisions.
I’d like to share an important tip on how you can apply comparison shopping, especially for groceries and household goods. It’s important for you to have a methodical way to know if you are paying a fair price. That’s where the “price list” comes in. This list will allow you to keep track of the lowest price you have recently paid for an item, so that when shopping you have added confidence when making buying decisions.
Here is an example. We have a large family, and at one stage in our family life, we consumed 14 gallons of milk each week. Since we had no cow, it was important that we find the best price on milk. My wife maintained the price list, and she noticed that one of the warehouse stores in town was offering their private label milk for $1.50 less per gallon than other stores in the area. She inquired who the manufacturer was, and it was the leading dairy in the area, so quality wasn’t an issue.
The store was using milk as a “loss leader” to create foot traffic, and the special pricing stayed in effect for a year. The result in our household was annual savings of more than $1,000. And that was for just one grocery item! It’s easy to see how savings multiply quickly as you apply the price list to additional groceries and other categories of spending. Comparison shopping is a powerful way to stretch your budget.
Moderating your spending
While poor economic times drive people to improve their shopping habits, our responsibility as stewards of Providence means we should always be concerned that we use our resources well. It’s called the virtue of temperance. The Catechism of the Catholic Church describes temperance as “the moral virtue that moderates the attraction of pleasures and provides balance in the use of created goods. It ensures the will’s mastery over instincts and keeps desires within the limits of what is honorable” (No. 1809). God love you!
Phil Lenahan is the president of Veritas Financial Ministries (VeritasFinancialMinistries.com) and the author of “7 Steps to Becoming Financially Free” (OSV, $19.95). Submit questions for columns to firstname.lastname@example.org.