When she was a junior in high school, Ingrid V. Sanders took a consumer economics class. “Our teacher taught us about the value of coupon clipping and using rebates to get back $2 to $3 or a free product,” explains the native Chicagoan. “We also learned about banking (e.g., balancing a checkbook).” Such knowledge came in handy during college and her first years in the workforce. She saved money on skincare items and cosmetics using the coupons clipped from circulars found in Sunday papers.
Sanders was in the midst of buying her first property, and living with and caring for her ailing parents, when she was laid off in April 1999. Her $1,600 a month in earnings was slashed by more than 50%. She survived on her severance pay, unemployment, and a “rainy day” fund (four months’ worth of living expenses) for eight months. “I relied heavily on coupons for groceries, toiletries, and products for sanitizing the home. I moved away from brands to generic names. I had to be very consumer savvy,” she says. She paid her parents’ bills, including her mother’s $7,000 car note, and managed their money, including Social Security. Then, in August, her mother passed away; her father died the following year.
Today, Sanders, 35, is an account executive with the advertising firm E. Morris Communications. She’s grateful her earlier experiences taught her how to comparison shop. “I offset my costs by shopping at different places, not just one store. I shop at the dollar store to get whatever I can, from shower curtains to bottled water, and paper towels to seasonings,” Sanders says. She also shops at designer outlets to avoid paying full price. She gives herself manicures and pedicures, and she sports a natural hairstyle. Sanders understands that a thrifty lifestyle and bargain-hunting skills enable you to save money to buy a home, finance a college education, and grow retirement funds.
Sanders says her penny-pinching allows her to save $300 to $400 a month. She invests $100 to $150 in two growth and income mutual funds she started outside of her 401(k) plan 10 years ago. She also makes regular payments to eliminate $3,000 in credit card debt. Like Sanders, you can sock away more money by practicing DOFE Principle No. 3: to be a disciplined and knowledgeable consumer. Here are some tips to help you master creative purchasing:
Avoid impulse buying. Michael Jacobson, executive director of Center for Science in the Public Interest in Washington, D.C., says use a list when you shop and stick to it. Don’t wander through department stores or shopping malls; you’ll avoid the temptation to buy items out of your financial reach.
Buy generic brands as well as bulk, wholesale, or secondhand goods. Jacobson also advocates shopping for bargains online or at factory outlets, price clubs, and discount stores. “Store brands are typically as good or almost as good as national brands, and they are typically 10% to 40% cheaper,” he says.
Find small ways to cut costs. Nothing beats a home-cooked meal.