The more you spend, the more you… 1


Spend. Period. Repeat after me “Spending money does not save money.” Repeat it again. And again. And again. Repeat it as often as you need to until it sinks more save more

You see signs like this one often during the holidays. My inner capitalist says they are excellent marketing, but my inner finance coach says “Run away!” You never save money by spending money. Especially not by spending money on impulse items. That’s one reason I recommend both shopping with a list or at least a purpose (I need some new pants and tops for work) and walking away from impulse buys for at least one day and only coming back and purchasing if you are still thinking about the item/deal.

I especially recommend walking away from the “Buy 1 Get 1 Half Price” deals that are becoming increasingly common. That’s not a 50% discount on one item. That’s a 25% discount on two items. The thing is, maybe you don’t need two items. Maybe you don’t even need or want the one item. Unless you actually need or want both items, it’s usually best to pass on these offers. Buy only what you need and save the money you would have spent on the extra item instead. Put the cash in an envelope and add it up at the end of the year. The amount might surprise you.

This time of year it’s also important to remember that “the more you spend, the more you spend” principle also applies to your federal income tax return. Do not let someone sell you more house than you can afford because “you can deduct the mortgage interest on your tax return.” That’s not a dollar for dollar savings. Depending on your tax bracket you are spending a dollar to save 15 to 25 cents (on average). The same goes for charitable contributions. If you usually make cash donations to charity or are feeling generous, great go ahead and make those donations and definitely take any corresponding tax benefit that applies. But don’t donate money you can’t afford to save on your tax bill. It’s a false economy.

Learning to spend mindfully is an excellent habit to cultivate and it will reward you in the long term.

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