Consumerism has turned into an addiction.

As a society, we are addicted to consumption. We consume products, food, things…at an alarming rate.

I’m starting this “Understanding Series” with consumerism for a reason. I’m going to go in-depth with every area of your finances throughout this series, but it all starts right here.

If you don’t understand consumerism and how to get out of the trap, you will lack in every other area of your finances.

Here it is: how to set yourself apart from the average consumer. How to be a savvy consumer…

You’re About to Become a Savvy Consumer

From credit card offers to coupons in the mail, we are constantly hit with marketing. Marketing is everywhere. It’s all around us, all the time and it always will be. It’s there to get us to buy, buy, BUY! And that’s okay, because that’s how business works, but it’s up to us to buy, as the consumer, intelligently. And it can be done, even if you’re an American.

We Americans get a bad rap due to our overspending and luxurious lifestyles that we can’t actually afford. It’s true that most Americans who look rich aren’t. Who wouldn’t want that new Mercedes with no money down and 4,000 easy payments of $500? As long as we can afford the monthly payment, it’s ours right? Well that’s another topic for another article, but it is possible to live within your means and be a savvy consumer, even if you do live in the Land of Opportunity.

In fact, I’m going to show you how to be a savvy consumer. More importantly, I’m going to show you how to take advantage of marketing campaigns without being taken advantage of by them. Are you ready? You’ve got this…

Change Your Thinking

I’m sure you’ve heard that before, just change your thinking. That’s the difference between the rich and the poor, right? Well yes and no, but thinking alone won’t do anything for your spending or your finances – there has to be action involved.

So what do I mean by “change you thinking”?

I mean don’t be fooled by marketing techniques. Learn how to spot them and take advantage of them. You have to have your marketing guard up constantly. Always be on the look out for someone trying to get you to spend money, because honestly, there will always be someone trying to get you to spend money.

Let’s get into a practical example of what I’m talking about…

How I Paid $47 for a Brand New Laptop

Do you remember those deals that used to be everywhere on the internet?

“Get this new laptop, iPod, or other new electronic item for free. Click here!”

Those ads were everywhere, so finally I decided to check it out. I didn’t believe the ad (at least not without some kind of catch), but I did want to know what was going on, so I clicked the banner. If you’ve ever clicked on one of those banners, you know how it works. You complete X amount of offers and they send you your free item. Not as easy as it sounds? Of course not, but I knew that it couldn’t be a flat out lie or the ads would have been taken down a long time ago and there certainly wouldn’t be so many.

So I tried it out. My wife and I sat down at the computer for a few hours to see what this deal was all about.

Here’s the short of it: we signed up for 14 different “free” offers. Now some of these offers required shipping, handling or processing charges (I guess they don’t really understand what “free” means), but overall I suppose the offers were kind of “free”.

Now I’m not a lawyer by any means, but I know how to read the fine print and I did…with every single offer. It turns out that every offer we signed up for would begin charging us after a certain time period (monthly subscription, reoccurring product shipments, etc.), so we made a list and here’s what it included:

  • What we signed up for (product, service, etc.)
  • How to cancel it (who to call, where to go, etc.)
  • The date to cancel by (before we get charged)
  • The account information (too many accounts to remember all of them)

We got our laptop. It was worth about $1,200 at the time (I looked it up) and we paid a total of $47. When the dates came, we cancelled everything. Only one of the accounts had some sort of error and charged us for something else, but one phone call took that charge off and left us with a laptop after paying the $47 and putting in about 4 or 5 hours of work (including cancellation time, reading the fine print and signing up for the offers).

Why did I tell you that?

Because offers like that are meant for people who won’t cancel the stuff they sign up for. We calculated how much it would have cost us if we would have kept everything and not cancelled the trials, subscriptions and products…the grand total? Around $600/month. Sounds crazy, right? How many people signed up for those offers, possibly got the laptop and continued paying the $600/month? Probably a lot. That’s why they do things like that. It’s for the people who are completely unaware of their finances.

It takes discipline and organization to pull off actually getting a free (or $47) laptop and most people don’t have either of those things when it comes to money. The companies know that, but that’s okay, because that isn’t you or me – we are savvy.

It Doesn’t Have to Be Worth $1,000

The laptop was an extreme example of how to be a savvy consumer, but that doesn’t mean you can’t apply this to every area of your life. We are a family of six, so something even as minuscule as dinner needs to be planned out strategically to be the most savvy consumers we can be, without spending hours trying to save a few bucks.

How does that work? We always have a plan.

When our kids wanted McDonald’s last week, we decided to make it happen (we rarely eat fast food). So we went to McDonalds and spent about as much as we would at a sit-down restaurant, right? Nope. We bought all the cheeseburgers from McDonalds for about $8. Then I went to the grocery store and bought a 50 cent bag of fries (that the kids actually prefer over Micky D’s fries) and cooked them at home. What about the soda? Did we drink water because it’s healthier and cheaper? Heck no! This was a fun meal and a rare occasion for us to east fast food, so I decided to “secret shop” the sodas.

Total cost of a fast-food meal for six: “$8.50”, but not really…

I know I just kind of slipped the secret shopping thing in there, but basically I am signed up for several secret shopper websites, so I constantly get emails about shops around me. I had an email to get free sodas from a local store as a secret shopper so I chose that day to do it. By the way, I actually got paid $15 to buy those sodas…

Actual total cost of a fast-food meal for six: “-$6.50.”

The 7 BEs of Being a Savvy Consumer

Yes, we got paid to eat dinner. That’s not normal.

And that’s my point. Don’t be normal. Be savvy. Savvy is anything but normal.

Don’t fall for the tricks and gimmicks – take advantage of them. Figure out what you can take advantage of by being a savvy consumer. Once you know what the marketing goal is, it’s usually easy to spot how it can be of use to you, as long as you don’t fall for the actual gimmick they’re expecting you to fall for.

Here are the 7 BEs to being a savvy consumer:

  1. BE an intelligent money saver – The main purpose of coupons is to get you to buy a bunch of other stuff that you didn’t have coupons for. If you find a great coupon, have a plan and stick to it. Don’t be wooed by advertising, stick to your plan. And calculate how much time you’re using with coupons. It’s not worth saving $30 or even $50 if it’s costing you 10+ hours per week. Your time is more valuable than that.
  2. BE a skeptic who takes action – When you’re given the opportunity to get something for free or cheap by sitting through a sales pitch (such as a timeshare pitch – does that bring up any bad memories?), have a plan ahead of time. Don’t go to the resort to get a free ticket for Disney World and spend $50,000 on a timeshare that you didn’t even know existed an hour earlier. Decisions like that take weeks, months or years to make. You should never make an on-the-spot decision, and especially not for a free prize that would have cost you less than a hundred dollars. If you can’t control yourself, just go buy the ticket, trip or whatever you’re getting.
  3. BE quick to look, but slow to act – Always be on the lookout for opportunities to benefit from, save money or make money, but make sure you fully understand everything you’re doing before diving in head first. Don’t be afraid of missing an opportunity by waiting to make a decision. It’s better to miss something, than to get into something you shouldn’t have.
  4. BE mindful with your money – Never make a purchase without taking two seconds to ask: do I really need this and is this the best price for this item? How many purchases have you made, only to go back a day later and realize you overpaid? It may or may not be worth finding a coupon or a better deal, but the important thing is to take the time to ask the question.
  5. BE an intelligent traveler – Traveling can be expensive, but it doesn’t have to be. Be a smart and savvy vacationer. There are plenty of options out there to book cheap resorts, swap homes and find cheap tickets. That may mean traveling during offseason, but what’s more important: booking a specific week or saving enough money to take two vacations for the price of one?
  6. BE a planner – Savvy consumers plan ahead. Period. From meal planning to vacation planning, it helps to be ahead of the game. When you go grocery shopping, you should have a list, stick to it and everything on that list should be for a specific meal. When you shop for clothes, keep a list of the things you need and the things you already have too many of. It’s hard to fall for marketing and advertising gimmicks, when you walk into a store knowing exactly what you need. The more you plan in advance, the less you spend.
  7. [Don’t] BE sold on spending money – It’s easy to fall into the trap of thinking you have to spend money to have fun. It’s quite often the opposite. Generally the more expensive something is, the less quality time it produces. Think about it: movie theatres and amusement parks are fun, but how much time are you really spending with your family? Some of the best things in life really are free.

What it Means to Be Savvy

Being savvy is a mindset – a lifestyle really. It’s not about clipping coupons, pinching pennies or never spending money, it’s about being mindful of your spending and prioritizing what really matters to you. “Savvy” translates to “aware”.

My wife and I aren’t impressed by fancy cars, so we don’t drive fancy cars. We’re not impressed by big houses, so we didn’t buy a big house. We prefer to spend our money on nice vacations, so we do. But what is it for you? What are the most important areas for you? Define them and focus on them. That’s where your money should be going.

Now go out there and BE a savvy consumer.

Here are a few articles to get you started:

Do you consider yourself a savvy consumer? In which areas could you become more savvy? What does “savvy” really mean to you from a consumer standpoint?