FIN 1050PF-I (Page 1 of 4)

WISE SPENDING, BUDGETING, AND GOOD SHOPPING HABITS

GENERAL CONCEPTS

  1. Psychologists tell us there are three factors that affect how we spend our money.

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  1. BEFORE BUYING ANYTHING, ASK YOURSELF THESE QUESTIONS:
  1. Did I want it yesterday?
  1. Do I really need it?
  1. Will I really use it?
  1. Can I buy it without credit?
  1. CONSIDER CAREFULLY THE FOLLOWING CONCEPTS:
  1. Take time before you buy.
  1. Know the difference between wants and needs.
  1. Do not allow impulse buying.
  1. Be patient and realistic; acquire things gradually.
  1. Prioritize your true basic needs.
  1. Don’t buy unnecessary things you can’t afford.
  1. Don’t become a slave to your payments.
  1. Avoid “Financial Quicksand” (SPENDING AND BORROWING BEYOND YOUR MEANS)
  1. Don’t try to keep up with the Joneses.

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FIN 1050PF-I (Page 2 of 4)

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“PEOPLE ARE BUYING THINGS THEY DON’T NEED, WITH MONEY THEY DON’T HAVE AND PAYING INTEREST RATES THEY CAN’T AFFORD TO IMPRESS PEOPLE THEY DON’T EVEN KNOW.”

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SHOPPING TIPS AND CONCEPTS

  1. Comparison Shopping is a very good idea, but it can be carried to extremes.
  2. Using Coupons is very smart, but only if you really need the item and would have bought it anyway.
  3. Shopping Sale Items (same as #2 above). Don’t buy something just because it is on sale.
  4. Consciously Avoid Impulse Buying. (Where is the milk in the supermarket?) Why? What is at the checkout stand?
  5. Beware of Bait and Switch tactics. Ask for a substitute item of comparable (or better) value or a rain check.
  6. Be aware of how different stores use Loss Leaders (especially small convenience stores).
  7. Never pay full retail for clothing or shoes. (They have a high mark-up.) If an item isn’t on sale this week, wait a week or two and it probably will be.
  8. Generics — A lot of money can be saved on many prescription drugs and over-the-counter remedies.
  9. Store Brands — You can usually save money and they are usually made by the same companies that made the name-brand products.
  10. Membership (Warehouse) Stores

You can usually save money because you buy larger quantities at a lower price per unit. However, because of all the “good deals,” many people tend to over buy/overspend. They go in to buy five or six items and end up spending $580! This mind-set has been aptly labeled as “Going broke saving money.”

  1. Unit Pricing

The larger the package, usually the lower the price will be per ounce or pound. This is not always true. Check and compare prices carefully.

  1. Negotiate — Always dicker on large ticket items (What do you have to lose!). Always ask the question: “Is that the best you can do?” (Richard Paul Evans)

13.Mail-in Rebates — What are the potential problems?

FIN 1050PF-I (Page 3 of 4)

THE IMPORTANCE OF PROPER BUDGETING

  1. Many people have little control over their money and have no idea where it all goes.
  1. Proper budgeting puts you in control and lets you know what you are spending your money on.
  1. Good budgeting includes planning, allocating, prioritizing, recording, and controlling your spending. It can change your financial life.
  1. Always “pay yourself first;” put some money in savings each month or pay day. Most people make the mistake of paying themselves last, and there is usually nothing left.
  1. Teach your children at an early age the importance of wise spending, budgeting, and saving. It will change their lives!

THE IMPORTANCE OF WISE BORROWING

1. We should only borrow when we really need to — for a home, car,

education, etc.

2. For most Americans, borrowing has become a way of life. If we want

something and can’t afford it, we just say, “Charge it.”

3. The average American consumer has 10 credit cards.

4. If you charge $2,500 on a credit card @ 18% and pay the minimum

monthly payment(**), it will take you 34 years to pay it off and you will

pay back a total of $8,781. If you incur $35.00 late fees several times a

year you may never pay it off!

5. The abuse of credit cards is possibly the major cause of serious financial

problems and even bankruptcy today.

(**)Assumes minimum monthly payment is 2% of balance owed and no new charges are made on the credit card.

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FIN 1050PF-I (Page 4 of 4)

WISE BORROWING (Continued)

  1. They are too easy to obtain and it is very easy to over spend. Most have very high interest rates plus annual fees.
  1. Many people shop carefully for a major purchase and negotiate a great price and then they “blow it” on the financing.
  1. Interest rates vary a great deal. Know and Care what you are paying.

WHAT IF YOU HAVE SERIOUS FINANCIAL PROBLEMS?

  1. Valuable help can often be obtained from Credit Counseling Organizations.
  2. Be sure that the organization is properly registered with the State of Utah and is bonded for $100,000.
  3. Ask for a complete schedule of their fees and charges.
  4. A non-profit organization will almost always be the least expensive.
  5. Check with the Utah State Department of Consumer Protection if you have any questions or concerns.

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NOTE:Beware of organizations (especially online) that claim they can “fix” or “repair” your bad credit. The vast majority of these have been proven to be SCAMS!

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