5 Ways to Cut Spending...and Still Get to Do and Buy Cool Things

Do you want to find ways to stretch your money, so it goes farther and is there when you really need it?

Here are some suggestions for knowing how much money you have, how much you need for expenditures, and how to reach your goals by cutting back on what you spend.

1. Practice self-control. To avoid making a quick decision to buy something just because you saw it featured on display or on sale:

• Make a shopping list before you leave home and stick to it.
• Before you go shopping, set a spending limit (say, $5 or $10) for "impulse buys"—items you didn't plan to buy but that got your attention anyway. If you are tempted to spend more than your limit, wait a few hours or a few days and think it over.
• Limit the amount of cash you take with you. The less cash you carry, the less you can spend and the less you lose if you misplace your wallet.

A "need" is something you cannot live without. A "want" is something that would be nice to have but isn't necessary.

"A need may be a pair of sneakers, but a want is the $125 pair advertised by your favorite athlete," explained Paul Horwitz of the Federal Deposit Insurance Corporation (FDIC) .

When you can control your spending on life's wants, you'll have more money available to save for what you need in the future.

Janet Kincaid of the FDIC offered this tip: "Take a day or two to think about any purchase that will cost a significant portion of your savings," she said. "If you really need to buy the item, it will probably still be there for you. If you don't need it but you still want it, perhaps you can buy something similar that's a lot less expensive and save the remaining money for other things."

2. Research before you buy. To be sure you are getting a good value, especially with a big purchase, look into the quality and the reputation of the product or service you're considering. Read "reviews" in magazines or respected Web sites. Talk to knowledgeable people you trust.

Check other stores or go online and compare prices. Look at similar items. This is known as "comparison shopping," and it can lead to tremendous savings and better quality purchases. And if you're sure you know what you want, take advantage of store coupons and mail-in "rebates."

3. Keep track of your spending. This helps you set and stick to limits, what many people refer to as budgeting. "Maintaining a budget may sound scary or complicated, but it can be as simple as having a notebook and writing down what you buy each month," said Janet Kincaid, FDIC Senior Consumer Affairs Officer. "Any system that helps you know how much you are spending each month is a good thing."

Also pay attention to small amounts of money you spend. "A snack here and a magazine there can quickly add up," said Paul Horwitz, an FDIC Community Affairs Specialist. He suggested that, for a few weeks, you write down every purchase in a small notebook. "You'll probably be amazed at how much you spend without even thinking."

4. Think "used" instead of "new." Borrow things (from the library or friends) that you don't have to own. Pick up used games, DVDs and music at "second-hand" stores around town.

5. Take good care of what you buy. It's expensive to replace things. Think about it: Do you really want to buy the same thing twice?