Why is it important to become a smart consumer?
Let’s start with the fact that we live in a consumerist society. That means if we want to survive, we need to buy things. We buy food to eat and drink. We have to pay for our shelter – whether that’s paying for a mortgage or the monthly rent. If you want to get an education for your kids, you also have to pay for that.
If you think about it, the quality of your life will depend on how much money you have. This doesn’t mean you need money to be happy. But the more funds you have the more access you get to various consumer goods. You can choose to live where you want or buy the things you like without worrying about whether you can afford it or not. It really helps make your life happier. In fact, one survey reveals that 72% of the respondents admitted that impulsive buying positively affected their mood. Take note that this was during the pandemic!
Impulsive spending is not that dangerous if you can afford it. But what if you don’t? And the truth is, it shouldn’t matter how much money you have. You need to be a smart consumer even if you are earning the minimum wage or a 6-figure income.
But how can you be a smart consumer? There are two simple rules that you have to follow.
A smart consumer sticks to the basic needs
The first rule is to know what your basic needs are – and to stick to it. That means this will be your priority. Unless all the basic necessities are met, don’t use your money on unnecessary things. That’s one of the first rules of managing your finances properly.
So what are the basic needs that you have to prioritize?
The food is on top. You can lose everything else – even shelter. But food is something that your body literally needs to survive. If you don’t consume enough food, you can get sick. It can compromise your health and your ability to live. So this is one expense that you cannot live without.
That doesn’t mean you can’t be a smart consumer when buying food. To be smart about this, you just have to opt for the most cost-efficient and healthy option that you have.
As a start, you have to cook your meals from scratch. There’s a lot of benefit to this. It’s easier to stick to a budget this way. If you only have a budget of $100 for the week, it’s more likely that you can stick to it compared to if you eat out. You can also control what you eat so you are sure that it’s healthy. And since you prepared it, you’re sure it’s clean.
Shelter is another important basic necessity after food. No matter what goes on around you, if you have a home to call your own, you’ll feel secure. This is your refuge. So having it is vital to having a great life.
But how can you become a smart consumer when it comes to shelter?
First of all, if you want to buy a house, make sure that you’ll choose a house that is just right for what you need. Like if there’s only 4 of you in the family, a couple and 2 kids, a 3-bedroom home will suffice in terms of space. You don’t need 2 livings, 5 bathrooms, and 6 bedrooms. Having all that space would be awesome but you’ll have to pay more for it.
The same is true when you’re choosing a house to rent. Make sure you don’t rent a house that is too big for you. The bigger it is, the more expensive it can get. Find a reasonable house in a safe location. Make sure the monthly rent will not take a lot out of your income.
Your basic utilities are part of the expenses that you have to pay each month. These include water, electricity, gas, and telecommunications. These utilities are needed by everyone to survive and live comfortably.
But that does not mean you should be reckless with how you use it. You have to use it sparingly. Use it only on what you just need. That’s how you and the rest of the household can become a smart consumer. It’s a collective effort for everyone at home. If a room is not being used, turn off the lights. Educate everyone, especially the kids on how to conserve water properly. You should also get energy-efficient equipment and appliances at home.
The bottom line is, you have to consume only what is needed from the basic utilities. It won’t just help lower your bills. It’ll also be good for the environment.
Another basic need is healthcare. According to reports, 27.5 million Americans don’t have health insurance. Although we don’t always get sick, it’s always a good idea to be ready. The health care costs in this country are very high. It can easily put you under a huge amount of debt.
So if you don’t have insurance, what is your other option to pay it off? Either your emergency fund or credit card. The latter, obviously, is more dangerous. If you use your credit card to pay for medical emergencies, the high-interest rate can add to the stress that you’re feeling.
To be smart about this, you have to make sure that you don’t just have insurance. You should have enough emergency funds. And once you get your medical bills, scrutinize it. Make sure that your only paying for medical treatments and services that you got – nothing more. And if you can negotiate a lower rate or affordable payment plan, do it.
Finally, being a smart consumer means having enough savings. There are so many ways that this can apply.
The first is having an emergency fund. This will save you from a lot of unexpected events in your life. It can keep you from having to borrow money to pay off a trip to the ER. Or maybe to pay for the repair of your car. This emergency fund will make you feel secure and in control no matter what the situation is.
The other type of savings is for your future – retirement. Even if you can only save a small amount, it will grow over time because of compound interest. As long as you are consistent with your saving
The last type of savings is for your other financial goals. Like if you want to go on a vacation or you want to buy your own home – you have to save up for it. The more you save, the less you have to borrow.
Smart consumers avoid these common financial mistakes
The other rule that you have to follow to be a smart consumer is to avoid certain financial mistakes. Here is a couple that you need to avoid as much as you can.
Too much credit card use
Let’s start with credit cards. It’s okay to use it. But don’t use it too much because that will lead to credit card problems. These have a high-interest rate so the finance charges will really increase your balance in no time. If you happen to spend too much on your cards, make sure you research options to pay it off. There are several debt solutions that will make your monthly payments affordable. You just have to make a decision to pay off this debt aggressively.
Impulsive buying habits
No smart consumer will be impulsive with their purchases. Every purchase is thought out in advance. It is aligned with the budget to ensure that it will be paid – if credit is used as the payment method. So if you really want to buy something, think about it first. Make sure it is really necessary to make that purchase. If it is necessary and you don’t have the funds to pay for it in cash, try to see if you can cut back on expenses. In case your credit card is the only option, be ready with a plan to pay it back. Unless you have these, you can’t go through with the purchase.