Saving Strategies - Big or Small?

November 5, 2009
Michael Sheehan

Some consumer advisors suggest that you get the best results for your efforts by making major lifestyle changes while others say small moves like clipping coupons can create frugal habits that translate into big savings.

Once you’ve made the decision to cut back on your spending, is it better to scrimp on small things or make really big cuts? Some consumer advisors suggest that you get the best results for your efforts by making major lifestyle changes, like downsizing to a smaller home or selling a second car. They claim that minor penny-pinching moves like clipping coupons or cutting out restaurant meals not only don’t save a lot but can be discouraging and can actually lead to more spending.

Not so, say another set of economic strategists. Moving into smaller digs or selling a second car may not always be practical, while making small moves, like clipping coupons, buying store brands, and shopping for cheaper gas can create frugal habits that can translate into big savings. Among the other thrifty tactics they suggest are switching to a cheaper cell phone plan, using your local library instead of buying books, and forgoing your morning latte in favor of home-brewed coffee.

There’s a middle way, according to other financial experts, which is basically to live on less money than you make. Adopting a frugal lifestyle, they say, not only means shopping for savings on day-to-day items, but also questioning the need for almost every other purchase before it’s made. Doing a cost-benefit analysis before you shop for anything, from a wide-screen TV to a new car to a bigger house, can help you build a habit of saving that will last a lifetime.