Spending Money To Make (Or Save) Money

Posted: 30 Jun 2011 04:00 AM PDT

Finding a great deal is always exciting. However, excitement over getting more for less shouldn't cloud your judgment when it comes to the long-term effects of your purchases, which often don't enter into our minds. There are plenty of examples of instances when apparent savings can actually lose you money in the long run: buying a massive loaf of discounted bread that will mold before you can finish it, or buying an expensive plasma screen and rationalizing the decision because you bought it with a rewards credit card.

Retailers, restaurateurs and Groupon employees alike know that the appearance of a great deal can switch off our rational decision-making capabilities, making us believe we need it now, whatever "it" happens to be. But if you're a thoughtful spender, shelling out now can actually save you money later. Don't just be a cheapskate; be a strategic cheapskate. [Also see 35 Ways to Make More Money]

photo credit: AndersSteenNilsen

Small scrimping, big savings: Consumers often agonize over finding the best bargains on big-ticket items like washing machines and home entertainment centers, but don't keep track of their smaller, more mundane purchases. If you really love your gadgets but couldn't care less about your food, you may find it worthwhile to splurge on the flatscreen while buying Safeway cola instead of Coke. On the other hand, you may eat organic but never watch TV, in which case your spending habits will be vastly different. Know what you like, and decide what's worth spending money on and what isn't.

Fight Temptation: You should only purchase items that are actually useful to you, regardless of how deeply they're discounted. Let's be honest. How many times have you thought to yourself, "I know it's not in my style…but it's just so darn cheap!" If you buy something you're not going to use, no matter how awesome a deal you're getting on it, you're throwing money down the drain. Many stores will have discounted items by the cash register to take advantage of just these impulse purchases.

Buy for the long term: Even though the mantra of the times is to save, save, save, you can actually do better over the long run by making an investment in your purchases today. Your instincts tell you to buy a nice suit off the discount rack, despite the fact that it's of a lower quality and may need alterations or frequent replacement. It would actually be more cost-effective to spend on a classic piece that will withstand the test of time.

An ounce of prevention: An annual checkup, even if you have good health insurance, isn't cheap. But that cost is nothing compared to the health problems that can arise if you're not getting checked out with a decent frequency. Putting off a doctor's visit until you're actually in some dire medical straits will probably end up costing you more than a frequent exam. Prevention isn't free, but it's certainly cheaper than a surprise trip to the ER for something you could have prevented with regular self-maintenance.

The value of time: As the saying goes, time is money. Consider the opportunity cost of what you're doing – that is, the value you could be getting by doing something else. An anesthesiologist could be making $10 an hour at In-n-Out, and getting value in absolute terms, but he'd be in the red by hundreds of thousands of dollars if he considered the money he could be making at the hospital. Make sure you take full advantage of your time and focus on ventures that will have the maximum payout.

Dollar Matters: What Makes You Happy?

Posted: 29 Jun 2011 08:53 AM PDT

There is a lot to be said for happiness. What makes you happy is different from what might make someone else happy. Here are some posts from around the PF interwebs that can give you some ideas of finding contentment:

Does Money Make You Happy? Mabybe Not

Quizzle takes a look at money and happiness. Let’s be honest. Would more money make you truly happy? Or would you just want…more money?

Are employers responsible for employees financial well being?

Jim Yih at Group Benefits Online takes a look at employer responsibility. Are employers required to help their employees find financial wellness?

Be Sure To Budget Fun Into Your Family Finances

I submitted this guest post to Faithful With A Few. As you get ready for the summer, there’s no reason to avoid including fun in the budget.

Marriage and Money: It’s Complicated, and Getting More So

Regina Lewis on Daily Finance takes a look at marriage and money. How happy you are in marriage might have a little bit to do with your finances.

Two Essential Steps For Finding a New Job

Want to chase your happiness to a new job? Matt from Matt About Money takes a look at what you need to do when finding a new job.

Career Dreams – In Three Parts

Follow your happiness and achieve your career dreams. Trent at The Simple Dollar takes a look at different paths followed by three people to reach their dreams.

The Cost of Online Gaming: Free to Play

Just because it’s free, doesn’t mean it’s a good idea. Alan Schram at Canadian Finance Blog looks at the costs of free online gaming. It may make you happy for a while, but it could have other costs.

Get Rich By Thinking About Being Rich

Flexo takes a look at positive thinking and become rich. Can visualization really help? Can you become happy and wealthy by thinking the right thoughts? An interesting post.

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