Out With The Old. In With The New.
This past year taught us a few financial lessons, not all of them good. Here are some questionable financial trends that appeared in 2011, and how to keep them at bay in 2012:
2011 Trap: Flash sale and daily deal sites became an addiction. By offering a limited amount of merchandise for a limited time, sites such as Groupon and Social Living were like catnip for impulse buyers. They created a sense of urgency via ploys such as displaying a clock ticking down the seconds until a given sale ends. Their goal: to make you feel the deal is going to go away — and you’ve got to take advantage of it NOW. The result: we overspent on items we didn’t necessarily need.
2012 Takeaway: Don’t take advantage of every deal just for the sake of the deal itself. These websites spark impulse — rather than needs-based — purchases. Instead, assess what you really need and set up your own process of discipline.
2011 Trap: The exhaustive hunt for the sale. Since tumbling into the Great Recession we’ve learned how to be smarter shoppers, which is a good thing. But the relentless hunt for the deal can become its own trap. We know a good deal when we see it, but we take too much time and effort to get that extra little bit off.
2012 Takeaway: Remember that time is money. Determine roughly how much your time is worth per hour. If you drive 20 minutes out of your way to save $1 on a box of cereal, it’s probably not worth your time. This is especially true for online shoppers. For example, take a only few minutes — not an hour — to search for a coupon or promotion code. If you can’t find one, move on.
2011 Trap: The mood of the day prevailed. We lived and spent in the present tense in 2011. Purchasing spiked with good financial news, and contracted when the headlines were negative. It didn’t help that financial news became part of mainstream media, and we’re getting it 24/7 online, in newspapers, on TV and radio. This means that spending tended to ebb and flow with the immediate economic outlook.
2012 Takeaway: Don’t be swayed too much by the daily financial news — negative or positive. Stay focused on your long-term financial goals and how much money you’ll need to achieve those goals.
2011 Trap: Savings shortfall. While there’s been quite a bit of chatter about the nation’s savings rate rising in a recessionary climate, most economic experts agree that we continue to under save, pointing to the fact that the savings rate topped at a measly 5% at the height of the recession.
2012 Takeaway: Don’t shop until after you save. Keep in mind both short-term and long-term financial goals, and adjust your savings to meet those goals. Then determine what you have left to spend.
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