Should you be spending your time on the big items?

Penny Wise, Pound Foolish?

by Helen Young


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Picture this: It is a nice sunny day, and you are out and about in your small, fuel-efficient vehicle. You are feeling very impressed with your fuel efficiency, and to add to this enjoyable sense of your financial savvy, you survey the gas prices at every service station you pass. On the way home, you select the very cheapest one, fill up, and then continue on your way singing a happy little song that goes something like, "I just saved $2.18, la, la, la, la la…" This, I have to admit, is the sort of thing I do for kicks.

I guess that makes me luckier than many when it comes to stretching my money. Some aspects of economizing come naturally to me and are actually fun. The problem, unfortunately, is all the other aspects that are not so much fun. In fact, they are downright boring. And confusing. And time consuming. Specifically, I am talking about the big stuff.

Take my 401k, for instance. In the days before I had my financial house in order, I sometimes found myself wondering if the last time I reallocated those funds was before or after the Internet was invented. Same for my kids' 529b accounts. I was seldom aware of whether interest rates were going up or down, or what the tax ramifications were of a lot of things.

The unfortunate fact is that big-picture financial health, just like physical health or anything else that's hard to maintain, ultimately takes personal discipline. You've got to force yourself to do things that you don't feel like doing.

So how did I go about making the painful leap from penny wise to pound wise? The following are crutches that have worked for me and still do whenever I'm tempted to let the big picture slide. Give at least one of these a try the next time you find yourself blithely clipping a pile of 20-cent coupons rather than refinancing your mortgage like you're really supposed to be doing.

  1. Create shortcuts to your financial information. Find a system that works easily for you, such as bookmarking the websites that track your accounts. Then get in the habit of checking them daily or weekly like you would the weather or the news. Once you can actually see your money leaking away, you'll feel more inspired to stop it.
  2. Create a "buried treasure" list, then investigate each item. Big savings could be lurking in all sorts of places you might not normally consider. For example, your employer's medical plans may change a lot over time, and a yearly cost comparison may really pay off. So may periodically shopping around for things like lower bank fees or insurance rates.
  3. Are you paying too much for auto insurance?
    Make sure you're getting the lowest rate.

  4. Track your progress. Watching your savings mount in one area is a great motivation to expand your efforts. Turn your buried treasure list into a chart on your refrigerator, showing how much money you saved on each item.
  5. Get help. If you feel overwhelmed, consider hiring a financial planner to create an overall plan or to help navigate your financial weak spots. For assistance on a more limited scale, funds like retirement accounts sometimes offer premium services that will handle periodic reallocation for you based on your tolerance to risk and other preferences.
  6. Just do it! No motivational technique is too dumb. Break out the rock music, slap up a few motivational bumper stickers, and visualize your favorite celebrity triumphing over the same hurdles. Or just hang up a picture of that beach in Hawaii you'll be sitting on once you find enough money to get there.
  7. Consider your alternatives. Sure, you could moonlight flipping burgers, or go into debt to cover all the money you're wasting on big-ticket items. But ultimately, investing some time and energy into maximizing the hard-earned money you've already got will lead to less work and greater quality of life.

When the going gets tough, don't be afraid to reward yourself by focusing on some small-scale initiatives like organizing your coupon collection or saving $2.18 on gas.

After all, even we penny-pinchers have to let down our hair once in a while.


Take the Next Step:

  • The mortgage refinance window could close for many people this year. Consider these 5 reasons to refinance your mortgage while you still can.
  • Make sure you are not overpaying for auto insurance. See how much you could save with just a few clicks. Fast, free quotes and online comparisons.
  • Discover dozens of additional ways you can cut monthly costs and create a little more wiggle room in your budget with The Dollar Stretcher's Guide to Trimming the Budget and Cutting Expenses.
  • Stop struggling to get ahead financially. Subscribe to our free weekly Surviving Tough Times newsletter aimed at helping you 'live better...for less'. Each issue features great ways to help you stretch your dollars and make the most of your resources. Subscribers get a copy of Are You Heading for Debt Trouble? A Simple Checklist And What You Can Do About It for FREE!

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