Wednesday, July 8, 2009
Plan, Plan, Plan
Tip #160 - Plan, Plan, Plan. The more I think about personal finance and the best way to build up savings and investments, the more I realize the importance of planning. The simple act of writing out a budget, even a general one, gives you a good idea of how much you can spend in different categories. Sure, we know that budgets aren’t perfect, but they go a long way in giving you an idea on how much you really have available to spend, and ultimately saves you money.
Besides using budgets as an overall planning tool, everyday planning is important, too. Planning your big purchases in advance by doing research will ensure a good price for a product you really want. Buying something at whim will usually result in overpaying and not necessarily getting the best product for you. Think about needing a television set. If your t.v. broke today and you went to the nearest store, you would pick out a new television from the store’s selection, pay the asking price and leave. Even if the store is known for its good prices, do you know if you go the right television for you? On the other hand, if you can put up with no t.v. for a few days, it will give you time to research televisions online, read customer reviews, and then find a good price (if not the best) for the one you choose. The second behavior will result in a television more in line with your needs and at a better price, all because of a little planning.
The same is true for other aspects of your everyday life, too – not just big purchases. Having an idea in your head (or written down) about what you are going to make for dinner will lead to a less expensive, more complete dinner than deciding at the last minute what you can whip up quickly or having to do take-out and spending more money because you weren’t prepared. When you go out for the day, bringing little snacks or drinks will save you from buying overpriced snacks at fast food or convenience stores. Again, just with a little planning.
With most things, the more you plan, the more you will save. Anytime you are in a rush to get something, you will most likely overpay because the cost of convenience is high. Of course, it is not possible to plan for everything! When the air conditioning breaks in July, you may not be able to wait a few days to call around and compare prices. Fortunately, in this Internet age, we can still sometimes do a “quick and dirty” research to at least help lower our convenience costs.
So, if you have events coming up, start planning what you will wear, what present you will buy, and what you will need to get there. If you have a major purchase in mind, start doing your research. If you don’t do meal planning, attempt to at least come up with dinner ideas for the next few days. And if you are going out for the day or away for a week, think about what needs your family will have during that time so you don’t have to buy last-minute, convenience items because you didn’t bring them with you. A little planning in your life will go a long way in keeping your expenses low, so you can spend money on things you really want to buy or do or at least put some away in the bank.
In Real Life (IRL) – A lot of things that are good in theory are good in practice, too. As long as you actually do them.. Planning is one of those things. I am generally a planner. I am good about bringing drinks for my kids when we go out for the day so I don’t waste money on drinks from fast food restaurants. And I often bring snacks with us, too for the same reason. and I usually research our big purchases or even our small ones. I truly believe planning saves people a lot of money.
But we really do need to practice what we preach. I realized this yesterday when it occurred to me that I haven’t bought my parents a 50th anniversary present. We are having a party for them this weekend, and while I had been busy making party favors, writing out the invitations, and coming up with a trivia game to play, I plumb forgot about buying them a present. Actually, I had a couple ideas in my head from a long time ago, but never acted on them, and now it's too late to do so. Then my sister gave me a good idea of buying them a digital picture frame and pre-loading it with pictures of our family through the years. I loved the idea and went right to the Internet to look at different brand frames, their reviews, and prices. Of course there were dozens. Unfortunately, the majority of them had to be bought online and I didn’t have time for that. So I started looking at local stores’ websites, but many of them are only available online, too.
At this point, I figured I just needed to buy one at a store in person. With Circuit City closed, that left me with Best Buy, Microcenter, Target, Wal-Mart, and K-Mart to look at. And if I had all kinds of time on my hand, I probably would have looked at at least a few of those stores. But because I failed to plan out this gift and didn't have much time, I decided to choose just one store to go to. After all, I have a 2-year old home with me all day. I’m happy if he’ll last through shopping at one store, let alone several.
So I chose to go to Target yesterday in a 3-hour window while my both of my other kids were at camp. I walked into the store, looked around at what they had and chose one out of about 10 based on looks and price. Was I the best purchase I ever made? No. Could I have gotten it for a better price? Yes. When I got home, I looked at reviews of the frame – which were fair, but not great. And I saw lower online prices than what I paid. Because I didn’t do proper planning, I didn’t get the best product or the best price. I could probably check out another store today, and return this one if I find something better, but guess what else I didn’t think about? A dress! I need to find something to wear before Saturday, too. Ugh!
And now you know why I have been thinking about planning in terms of personal finance lately. Mostly because I haven’t been doing it, and I realize how much it’s going to cost me. So take my advice and try to plan out your purchases, as well as your activities, it will save you money (and lots of running around) in the end.