Cut the Fat: Four Ways to Stop Wasting Money

As you are on your path to financial freedom, I want to offer you some tips on how to stop wasting your hard-earned money. Why keep giving your money away to the corporations who are so desperate to reach into your wallet, when you could be saving this money for yourself? Maybe you are on Level One (click here to learn more about our Five Levels of Financial Freedom), desperately trying to start your systematic monthly savings. Or maybe you are saving money each month, and now you want to increase the amount that you put back.

Regardless of your situation, the following tips and ideas can help you and your family “cut the fat” from your budget.

1. Avoid shopping traps, which cause needless spending.

Stores spend billions on the science of getting you to spend your hard-earned cash on their products. They understand how your brain works and then use this knowledge against you. We have an extensive article covering 11 ways to avoid shopping traps and spend less money when you go shopping, but here’s a brief overview.

There are three powerful financial forces (we call them the “Consumption Trap”) that are working against you: corporations, media, and financial institutions. A real-world example of these three forces is Amazon (corporation), Hulu (media), and CapitalOne (financial institution/bank). Amazon wants to sell you its goods, Amazon advertises on Hulu’s streaming platform, and CapitalOne is all-to-eager to issue you a credit card so you can buy lots of Amazon’s goods. None of these institutions is evil or acting in an immoral way necessarily, but the system is a powerful force working against your hard-earned money.

Because the corporations want to sell you the most they possibly can (aided by media and banks), it is up to you to protect yourself and your budget. It’s necessary to know what the shopping traps are and how to avoid them (at all costs!).

Here are three of the 11 powerful ways to avoid shopping traps:

1. Don’t carry items around with you in a store. They begin to feel like “yours”. It’s painful to put them back. Keep items on the shelf until you’re ready to go. If you’re worried because it’s the last item in your size, “hide” it on another shelf or under a big pile of a different size.
2. Don’t interact with sales people too much. Yes, they are quite friendly. But the more you interact with them, the more likely you are to purchase from them, so kindly tell them you don’t need help right now.
3. Do not apply for store credit cards… no matter how big the discount is. But hey, wouldn’t it be better to pay $85 for those shoes you want versus $100? All you have to do is fill out some personal information and the savings will abound. The ramifications for saving a paltry $15 include getting a credit inquiry on your credit report, risking the sky-high interest rate if you are unable to pay in full on the due date, and the flood of marketing that will ensue once you become a “valued” card holder.

2. Review your insurance protection.

It’s no secret that insurance costs have risen dramatically in the past several years. Whether it’s health insurance, homeowners’ insurance, or even basic auto coverage, you have likely seen anywhere from a 10-50% increase (or more). This can stretch, if not devastate, the average American’s budget.

The most important thing to remember about insurance coverage is that there are no “do-overs”. Take your time in choosing your policies. Make sure every piece of protection that you would want is in effect and properly structured to meet your specific financial goals. Think about raising your deductibles and using the savings to increase your coverage.

Here are the insurance policies you may want to examine (the last two are not technically insurance, but need to be reviewed periodically nonetheless):

• Auto
• Home
• Liability (personal and/or business)
• Life
• Disability
• Long-term Care
• Last Will and Testament
• Advance Healthcare Directives

3. Try homemade gift-giving this year.

Instead of spending hundreds, if not thousands, of dollars on birthday, Valentine’s, Easter, anniversary, and Christmas gifts, create meaningful gifts that come from the heart.

Do you feel like you have to out-do last year’s birthday gifts for your children or surprise your grandchildren with a bigger Christmas gift than you gave them last year? Break the cycle of expectation (which can sadly breed entitlement) and save money at the same time. Your (true) friends and family will not dislike you for this, but I have found that they will follow your lead and do it themselves.

As a bonus, if you teach your children to make their gifts as well, they will learn to think outside of the box and be creative. My family has made gifts such as homemade jerky, books, CDs, handmade clothing and accessories, card games, jewelry, and chocolate candy. These gifts are often used more than anything bought from a store, and we save hundreds of dollars per year (compared to when we used to give store-bought gifts).

Please don’t misunderstand. We give gifts to our loved ones, friends, church, and community. We give good gifts. We give gifts often. However, we have attempted to break the cycle of corporate-bred obligation to give everyone in your life a gift “courtesy” of the corporation (i.e. Walmart, Amazon, Temu, and every other company in the world essentially!). An added benefit of this strategy has been that our home is much less cluttered with things we don’t need or use (more on this in number 4 below).

4. De-clutter and make money with a sale.

Turn your house upside down for two weeks. Go on eBay, Amazon, Marketplace, and Craigslist and sell everything you don’t need or want.
Next, take any items that will be accepted at local consignment shops (clothing, furniture, etc). Then, have a garage sale with everything that hasn’t sold yet.

Put all your earnings toward your savings (or toward investments if you already have adequate savings). The difference between a “poor” mindset and a “wealthy” mindset is what you choose to do with the money you make from this big de-cluttering sale.

Be patient with this process. It can take several days or weeks for items to sell. Remember to price your items based on the going rate on the platform you choose (or even slightly lower to stand out). The goal is not necessarily to eeke out the most money from this process, but rather to foster a long-term mindset of de-cluttering your living space and avoiding buying things that don’t add value to your life. The secondary goal is to practice saving or investing your proceeds rather than simply spending them right away.

I hope these ideas will jump start your monthly budget and help you and your family start saving more money.

You can view the financial plan that Jerry and I used to break free financially… in its entirety… for FREE. It’s called the Five Levels of Financial Freedom, and you can go through each level here.

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