1. Practice self-control. To avoid making a quick decision to buy something just because you saw it featured on display or on sale:
- Make a shopping list before you leave home and stick to it.
- Before you go shopping, set a spending limit (say, $5 or $10) for "impulse buys"—items you didn't plan to buy but that got your attention anyway. If you are tempted to spend more than your limit, wait a few hours or a few days and think it over.
- Limit the amount of cash you take with you. The less cash you carry, the less you can spend and the less you lose if you misplace your wallet.
For more guidance on spending wisely, see "Do You Really Need Those $125 Designer Sneakers?."
2. Research before you buy. To be sure you are getting a good value, especially with a big purchase, look into the quality and the reputation of the product or service you're considering. Read "reviews" in magazines or respected Web sites. Talk to knowledgeable people you trust. Check other stores or go online and compare prices. Look at similar items. This is known as "comparison shopping," and it can lead to tremendous savings and better quality purchases. And if you're sure you know what you want, take advantage of store coupons and mail-in "rebates."
3. Keep track of your spending. This helps you set and stick to limits, what many people refer to as budgeting. "Maintaining a budget may sound scary or complicated, but it can be as simple as having a notebook and writing down what you buy each month," said Janet Kincaid, FDIC Senior Consumer Affairs Officer. "Any system that helps you know how much you are spending each month is a good thing."
Also pay attention to small amounts of money you spend. "A snack here and a magazine there can quickly add up," said Paul Horwitz, an FDIC Community Affairs Specialist. He suggested that, for a few weeks, you write down every purchase in a small notebook. "You'll probably be amazed at how much you spend without even thinking."
4. Think "used" instead of "new." Borrow things (from the library or friends) that you don't have to own. Pick up used games, DVDs and music at "second-hand" stores around town.
5. Take good care of what you buy. It's expensive to replace things. Think about it: Do you really want to buy the same thing twice?