Ninja Piggy's Wallet Defense: Tactic #4

In order to be a Ninja Piggy for your finances you need to be the master of your Expenses.

Businesses have created very advanced methods to take as much money from you as possible through clever marketing which uses psychology to trick your brain into paying more.  Corporations spend billions of dollars each year at finding new ways to entice you into spending more and their methods continue to get better.

There is a way to defend yourself from the advanced marketing tactics. It requires discipline and a different way of thinking. Below is a common marketing trap that can wipe out your ability to save, along with some helpful tips on how to avoid.

Tactic #4:   Stay mindful of the true meaning of savings.

Saving vs. Saving. One word, two different meanings.

My wife is great at saving money. She’s always on the hunt for a good deal and can probably tell you how much she has paid for all the clothes in her closet. She might buy a jacket, originally over-priced (as my Dad likes to say) at $60 that she is able to get for $25. A savings of $35.

I, on the other hand, take a different view of savings. Savings to me means putting money into our savings accounts and investments. The flaw I see with my wife’s view of savings is that she has to spend money to get the savings. When a car commercial comes on and tells you that you can save thousands if you buy now, they conveniently leave out the fact you have to spend tens of thousands to achieve the savings.

I’m all for a good deal, and if there is something that you really need, then it’s great when you can buy it for less than you were expecting to pay (read about the 3 different types of discounts). Stores are in the business to make money, and they aren’t just offering good deals so they can lose money. Stores know that by offering a great deal on an item, you might buy something else in the store you might have not purchased otherwise. Maybe you came in for the great deal on the one pair of shoes, but you are leaving with two shirts and a pair of jeans because they also were on sale.

It’s fun to tell our friends about snagging a good deal on something, but that’s part of the issue. Getting a good deal on something usually leaves us with the feeling that we did something smart with our money, even if it means spending $100 on something that we probably could have done without. Being frugal by discount shopping is a good step, but what are you doing with all that money that you are saving? According to my wife’s view of money, she could have saved thousands over the past couple years and have nothing to show for it financially other than a few cute outfits (which doesn’t count as an asset).

Quit falling for the “savings” trap. Don’t confuse getting a discount  with financial progress. Yes, we should be price conscious shoppers, and getting a good deal is definitely better than paying more money than you need to. But, we tend to find other places to spend the money we “saved”. Next time you get a good deal on something, immediately transfer the “savings” to a savings account. Then, you’re really saving money.

Finally, remember the best “savings” of all comes when we don’t give into our impulse to buy. I’ve saved thousands of dollars over the years by not buying things I’ve wanted. Don’t confuse your brain. Use the terms discount, price cut, or markdown in place of the term savings when it comes to buying something on sale. After you’ve changed your perception you can sit back and watch your savings grow.