16 Rules to Get Your Spending Under Control

When writing our last post about splurging, I started thinking about how I approach the purchases I make and I realized I have a very complex set of rules I follow to determine what I buy. In this post I will try to explain the things I keep in mind when buying just about anything.

I've divided the rules into four categories:

1. What to Buy - These rules help you select which item to buy when choosing between similar products.
2. How to Save - These rules help you pay as little as possible once you've decided what you want.
3. When to Spend More - These rules help you decide when you should spend a little extra on something.
4. What Not to Buy - These rules help you avoid buying things that may not be worth the money.

Hopefully all that makes sense. On to the rules!

What to Buy
The ultimate goal when buying anything should be to get the maximum utility for every dollar spent, which we could also call maximizing value. For some things it's pretty easy to maximize value. Most grocery stores make it easy by listing the unit price (price per ounce, price per egg, price per sheet of tissue, etc.). For most purchases outside a grocery store, and even some inside, it's a lot harder to know if we are maximizing value because the intangible element of quality plays such a large role. Since quality is mostly subjective, there isn't a great way to definitively decide which product offers the best value, so I use the guidelines below to help.

1. High Price ≠ High Quality
Paying more for quality makes sense, but a high price by no means guarantees high quality. Much of the time a high price gets you nothing more than a fancy brand name. It is important to use good judgement to determine if an item is priced higher because it is has a better design and uses superior materials, or if it is pretty much the same as the cheaper options, just with a bigger name and advertising budget behind it.

2. Low Price ≠ Low Quality
This is the corollary to the rule above. One should never assume one product is inferior to another just because its price is lower. For example, you can buy a fantastic vacuum insulated tumbler from RTIC for about half the price of a similar product from Yeti. Some people would assume the Yeti is a far superior product, but in reality they are virtually identical, and it makes no sense to buy the more expensive tumbler.

3. Mid-Priced = Right Price (Often)
There are usually several versions of every product out there. There is the cheapest version, the most expensive version, and often several in between. More often than not, you should pick the option in the middle. The cheapest one is often the cheapest for a reason, and the most expensive one usually isn't worth the premium, so the best choice is the mid-priced option. Take toothbrushes for example. You could use the free toothbrush your dentist gives you, but it won't do a great job. You could also buy a nearly $200 super-duper toothbrush, but it won't be worth the money. The best option is the one in the middle, like this ~$30 unit, which will do a great job for a reasonable price.

4. Weigh the Warranty
For lots of items, it's hard to tell which option is the highest quality, especially when we're shopping online and can't thoroughly inspect them. One clue we can use is the warranty. A longer warranty implies the manufacturer has more confidence in the reliability of their item. Therefore, it's usually fair to assume an item with a longer warranty will be of higher quality than an item with a shorter warranty. This isn't always the case, but it's never a bad idea to at least check what kind of warranty your product comes with.

I take lifetime warranties very seriously. And I always save my receipts.

How to Save

Once you've decided what you want to buy, it's important to get the best possible price. We use the following strategies to make sure we do.

5. Buy Used
When buying pretty much anything over $100, we try to buy used. We've written about this before, but it's saved us over $11,000 on household items, or about 70% compared to buying new. Buying used is the best way to purchase expensive, high-quality items because you save a lot of money and the item will still work great because it was made well.

6. Shop Around
I sometimes forget to shop around because I default to Amazon for just about everything, but they don't always have the best price. Before you buy, do a quick Google search and see what your desired item is going for around the web. It might even be cheaper at Walmart or Target and you won't have to wait for shipping.

7. Clip Those Coupons
We're not into the extreme coupon thing, but there are are savings to be had from coupons. If you're shopping online, take a minute to Google coupon codes for the site you're shopping on. There are lots of sites that aggregate them and if you're lucky, there will be a code that will save you a few bucks.
If you're shopping at a store that always has coupons, like Harbor Freight, Bed Bath & Beyond, or Kohl's, make sure you take a coupon. You can usually find them online if you don't have a physical one.

8. Wait for a Sale
If you don't need the item you're buying right away, consider waiting to see if it goes on sale. There are some items that go on sale often, but many are less predictable. So be patient and keep an eye out for a good price. If you want to buy from Amazon, we just wrote about a tool that can help you get the best price. Another decent option is to wait for Black Friday, when just about everything seems to be on sale.

9. Get Cash Back
There are a couple ways to get cash back when you shop. The first is to use a cash back credit card like the AmEx Blue Cash Preferred (affiliate link) for all purchases. If you pay it off in full every month, it's free money.
The second is to use a shopping portal like Ebates (affiliate link), which will give you money back when you make purchases from one of their many partners.

When to Spend More
Most of the time it doesn't make sense to spend more than you need to, but there are a few things where paying a little extra is worth it. That doesn't mean you need to buy the most expensive version possible, but you can step up to something a little nicer than average.

My favorite pencil.

10. The Things Important to You
This isn't a free pass to go wild, but if there's something you are passionate about, it's OK to spend a little extra on it. This also applies to items you use with great frequency. For example, I am slightly obsessive about writing implements. I want them to feel a certain way, and I get a lot of satisfaction out of a well crafted pen or pencil. I also use them quite a bit, so it's reasonable to invest in good ones.

11. The Things You Will Keep Forever
There are some things you know you will keep and use forever, so it makes sense to pay a little more for a quality item that will last. If you cheap out, you might have to buy another one someday, and that will probably cost more than getting something nice to begin with. Tools are one example of this type of item.

12. The Things You Use All the Time
If there's something you use frequently, it makes sense for it to be nice, especially if that item will make your life easier. For example, if you cook a lot, you should probably get a good knife that is comfortable to use and will hold an edge. There's no reason to struggle with a substandard blade when you can have a nice one for a few bucks more.

13. The Things that Keep Your Other Things Nice
Once you've bought something, it's important to take care of it, so don't skimp on maintenance. Spend what it takes to properly care for your stuff. If you don't, you will probably have to buy another one, which is much more expensive than maintaining it in the first place. A good example of this is vehicle maintenance. Change your oil on the recommended schedule, and don't be afraid to pony up for synthetic (but be careful because they like to overcharge for it).


What Not to Buy

We discussed maximizing value above, so we obviously have to avoid minimizing value, and the worst value possible is spending money on stuff you don't need. Since you don't need this stuff, it has zero utility, and therefore zero value.

It's easy to spend too much on a wedding when you're trying to impress people.

14. Don't Spend to (Try to) Impress

The fastest way to go broke is to spend money in an attempt to impress others. The truth is most people don't care about your expensive stuff or your extravagant event, and the ones who do care aren't worth impressing. Be yourself and only buy what you need. You and your bank account will be much happier.

15. Don't Spend Out of Fear
Fear is one of the greatest motivators known to man. Marketing people know that and will take advantage of it. That's why you must be very careful not to spend recklessly when motivated by fear. There are many products people buy out of fear that they probably don't need, including guns, security systems, "safer" cars, etc. These all tend to be very expensive and seldom used, so remember, if your main motivation for a purchase is fear, make sure you are making a rational decision.

16. Take Some Time to Think

This is a very common piece of advice, but for good reason. Before you buy anything, take a while to think about whether you really need it. At the very least, you should take a day. Sleep on it and see how you feel in the morning. Longer is better. You would be amazed how your feelings on something can change over time. I've also found that after I consider purchasing something, I often find it for free or very cheap in the near future.

This list is a lot longer than I thought it was going to be. Apparently spending/not spending is pretty complicated. Hopefully this list clarified your thoughts on the subject, because it certainly did for me.

What are your rules for spending? Let us know in the comments.