7 ways to spend smarter

Nobody likes buying something only to never use it. See 7 ways to make smarter spending decisions.

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Writing about the "Last 10 Things I Bought" made me realize that you can't get away from having to spend your hard-earned cash.

Money management is a critical skill for adults. There are bills to pay for your basic necessities, plus planning for irregular but expected expenses (such as property taxes, car repairs and insurance). Of course, you need to have some money left over to save for emergencies and for the future.

Finally, you want to have some funds to spend on yourself. The better you manage your spending, the more you have left for the fun things in life.

Deciding on purchases can be harder than it seems. We are bombarded with choices in our society, with advertisements everywhere vying for our attention. Flash sales are also popular, with time clocks clicking down to make your purchase before the "deal" expires. Emails from your favorite stores arrive in your inbox daily with sales and promotions.

How do you decide when and where to spend your money? Do you only buy things on sale and pass up things you may really want? Do you only purchase something if you absolutely love it? Do you make impulse buys only to regret them later?

There is nothing worse than buying something only to never use it and end up giving it away. You not only wasted your money, but you deprived yourself of something else — something that might have given you great value and joy in life.

What criteria can you use to decide when you do spend your money? Let's examine 7 ways to be smart about spending so you make smart money decisions.

1. Resale Value.

Buy high-quality items and enjoy using them. Then sell them "gently used."

Though consignment shops have always been a staple for many people, the fashion resale market is showing explosive growth.

According to thredUP's 2014 Annual Resale Report, "Resale businesses represent one of the fastest-growing segments of the retail industry, with the number of stores increasing by 7% annually." Consignment shops make up 12-15% of retail sales nationwide.

Tip – Factor in resale value. Consider selling your quality items either at a consignment store or online after enjoying them yourself. Besides helping to reduce your clothing costs, someone else gets to enjoy them and your closet will have a little more room.

2. Calculate Cost Per Use.

Sometimes it's more cost efficient to spend more in the first place! If you only wear an item once or twice, even if it's not an expensive item, it may be more costly.

For example, I have four adult children — one is married — and my youngest son is getting married next year. That means I will be getting a new dress to wear as "mother of the groom."

Even though I'd like to, I don't think I can wear the same dress I did for my step-daughter's wedding — though I may be able to get away with it when the fourth one gets married. (No one will remember unless they read this blog.)

I paid $250.00 for the dress at Nordstrom and can eventually stretch out the use to two weddings.

Cost per use for the Nordstrom "mother of the bride" dress:

$250/2 uses = $125.00 per use. Though this dress served its purpose and was lovely to wear, it was not very cost efficient.

Contrast that with my silver Obermeyer ski jacket with the faux-fur-trim hood purchase. After learning to ski and discovering I really liked it, I needed to upgrade my ski wear from my son's hand-me-down jacket to something a little classier. I found one at an off-season sale on Main Street in Park City, Utah two years ago.

The jacket retails for about $400, and I got it on sale for about $125. I ski about 30 days a year, so rotating between another jacket and this one, I'd say I wear the Obermeyer 15 days skiing each season, and then another 10 days around town.

I've owned it now for two seasons, so I've worn it maybe 50 times so far, and will use it again this season to make it 75 "wears" in three years.

Cost per use for the Obermeyer Ski Jacket: $125/75 uses = $1.67 per wear. Even if I'd paid full retail price, the jacket still would be about $5 per (stylish) wear.

Tip - Consider the cost per use when making any purchase. If your item will last for many years and you’ll enjoy using it often, it may be worth paying a higher initial price.

3. Make an Investment.

Does this item help you save money on something else? Sometimes buying "to save" makes sense. Take buying a nice lunchbox, for example.

Check your bank statement to see how much do you spend each week on lunches. When you consider bringing your lunch instead, the first image that may pop into your head is a rumpled brown paper sack with a smashed peanut butter sandwich, baggies full of veggies and a cookie.

At the office, this could be downright embarrassing when coworkers glance your way.

Consider instead purchasing a high-quality lunchbox such as a PlanetBox or a bento box. Last year, I purchased a stainless steel PlanetBox lunch box so I could still eat leftovers and make my own healthy meals, but still have something classy enough to bring to lunch with coworkers and friends at the dining area near our building. The PlanetBox was the answer, and I spent over $65 on mine.

But it was worth it. If I ate lunch out, I could easily spend $10 a day without even noticing. If you do that four times a week, you're spending $40 a week, or $160 a month. My lunchbox paid for itself in a little over a week.

Tip - Consider how long it will take for your purchase to pay for itself.

4. Boosting Productivity.

Tools to help you be more productive might be high on your list of smart purchases.

In fact, I am writing this blog on my iPad using a keyboard that snaps into place and doubles as an iPad cover. Neither of these purchases were cheap! The iPad saves me time, because it allows me to write in the mornings on the commuter bus to work.

In order to constantly capture ideas, I pull my iPad out of my purse and get writing when the idea pops into my head. If I didn't have an electronic device like this, I'd have to write notes and then transfer them to my computer at night when I got home from work.

I'd estimate my iPad gives me an extra hour every weekday. That's 20 hours a month.

Tip – Invest in products and services that can help you boost your productivity. It could be a phone upgrade, an app, or a virtual assistant.

5. Put Your Money Where Your Values Are.

Think about where your products are made, who makes them and who is selling them.

Is it important to you for your dollars to pay a fair wage to the workers who pick your coffee beans? Do you want to buy products made in the U.S. to help create jobs for workers here? Do you want to support local businesses who provide goods, services and jobs in your community?

You can put your money where your values are by doing a little research before you purchase.

For example, you have many dining choices. In Park City, Utah where I live, my husband and I enjoy dining at Deer Valley Ski Resort restaurants year round. It's not just because I blog for them; they have a commitment to using local and sustainable food items.

The coffee they serve is 100% certified fair trade. They purchase their flowers, herbs and salad greens from local organic produce producer, Copper Moose Farms, and even though Utah is landlocked, their chefs check the Ocean Watch website regularly to make sure Deer Valley is purchasing sustainable fish products.

Tip – Whether it's dining, vacationing or any other product or service you spend money on, check to see if the company's values match yours. If not, consider an alternative that supports something you value.

6. At the Lowest Price Possible.

Though the "extreme couponing" craze has slowed down, the concept of making purchases during sales cycles and using coupons to further reduce your costs is tried and true.

For household items and groceries, go old school. Pick up a Sunday paper for weekly discounts and coupons to save money on items you use all the time. Shop at discounted warehouse stores such as Sam's Club or Costco once a month to buy in bulk at warehouse prices.

Shop for bargains at outlets such as Nordstrom Rack or discount retailers such as T.J. Maxx. Sign up for text coupons at stores you frequent.

In my case, I work right across the street from Macy's, so I signed up for their "coupon text alerts." I don't shop frequently, but when I need something, I try to coordinate my visit with one of their frequent sales.

If you are buying online, simply search sites such as Coupons.com or RetailMeNot to see if there are coupons or discount codes you can use immediately on retail websites.

Tip - Spending a little bit of time researching sales or coupons could save you big dollars over time.

7. Simply to Have Fun.

Ask yourself what would make you jump out of bed at 5 a.m. on a Saturday morning. Direct your spending there, and keep your wallet closed if a product or service doesn't meet the "joy criteria."

As I shared in the "Last 10 Things I Bought" post, my husband and I recently purchased a night vision trail camera to give us an idea of what creatures are lurking around our townhome in the dark. It has an infrared camera so it won't bother the animals with a blinding flash of light.

It was so exciting to pull out the memory card the first morning and see a photo of a beautiful buck looking straight at us! Every morning we switch out the cards and enjoy checking out the wildlife.

On the weekends, we go hiking and set up the camera to see what animals turn up when no one is around. We snapped a photo of an unsuspecting moose wandering down a trail.

We've seen bobcat and mountain lion tracks and hope to catch a glimpse of one with the trail cam soon.

Tip – Follow the joy! If it's really fun and you can afford it, go for it. If you have to save up for something you'd love to have or do, it might be worth the wait.

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  • Saving and Spending
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This article was written by Nancy Anderson from Forbes and was licensed as an article reprint from October 21, 2015. Article copyright 2015 by Forbes.
The statements and opinions expressed in this article are those of the author. Fidelity Investments cannot guarantee the accuracy or completeness of any statements or data.
This reprint is supplied by Fidelity Brokerage Services LLC, Member NYSE, SIPC.
The third-party provider of the reprint permission and Fidelity Investments are independent entities and not legally affiliated.
The images, graphs, tools, and videos are for illustrative purposes only.
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