7 Smart Spending Tips That Help You Stop Wasting Money

I remember a stretch when I bought a pricey gadget that I used twice. It sat in a drawer for a year. Every time I saw it, I felt a little pang, and the pang cost me more than the dollars did. That’s what I mean by wasted money. It’s money that bought almost nothing I cared about.

Most money advice tells you to spend less. That helps, but it leaves out a second question: are you getting the most out of the money you do spend? Three psychologists, Elizabeth Dunn, Daniel Gilbert, and Timothy Wilson, took that question seriously. In 2011 they published a review in the Journal of Consumer Psychology. They noted that the link between money and happiness is surprisingly weak, and they suggested this may be partly because of how people spend. Drawing on earlier research, they proposed eight principles for getting more happiness out of a dollar.

Their first principle is to buy experiences instead of things. That one gets talked about a lot, so I’ve focused on the other seven. Each tip below is built on one of them. Two cautions first. A review like this proposes ideas based on research, and it isn’t a guarantee for any one person. And none of this replaces a budget. If you’re stretched thin, cover the essentials first. The explanations and examples beyond the authors’ headlines are my own, and I’ll flag where that’s the case.

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1. Spend some of your money on other people

The authors suggest using your money to benefit others, not only yourself. It can sound odd in an article about not wasting money, but think about it this way. A gift, a meal for a friend, or a donation can carry, in my experience, more meaning per dollar than another thing for yourself.

I remember a birthday when I spent a small amount on a thoughtful gift for a friend who’d had a rough year. I still remember her reaction, and I can’t tell you what I bought for myself that same month. That’s my own story, not a study result. Start small. This doesn’t need to be large to count.

Try this: This week, spend a small amount on something for someone else, and notice how it feels.

2. Buy small pleasures instead of saving up for one big splurge

The authors suggest buying many small pleasures rather than a few large ones. A coffee on the porch, a good book, a favorite snack, or a walk to a nice park can add up to more good moments than one expensive purchase does.

For a while I kept a small weekly “treat” amount. It made my week better, and it kept me from blowing the whole budget on a big reward once I’d been “good” for a month. That approach is my own habit, not a finding. Choose treats you’ll actually enjoy, not ones that just feel like the thing to buy.

Try this: Write down three small pleasures that cost little, and plan one for this week.

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3. Skip extended warranties and other overpriced insurance

The authors suggest avoiding extended warranties and other overpriced insurance. The authors describe these add-ons as overpriced, which means they tend to cost more than they’re likely to give back. They’re usually offered at the register, when you’re already about to pay, which isn’t the best moment to weigh a decision.

The things that bring you the most happiness per dollar aren’t always the things you’d expect.

A caution of my own: I’m not talking about coverage you truly need, like health, car, or renters insurance. Please keep those. This tip is about the small add-ons you’re asked to buy on the spot. If you’re unsure, take the offer home and look it up before you decide.

Try this: The next time you’re offered a warranty at checkout, say, “I’ll think about it,” and leave it for 24 hours.

4. Wait for it, because delaying a purchase can be part of the fun

Another of the authors’ principles is to delay consumption. Put off buying something you want and, as I understand the idea, you may enjoy the wait as well as the purchase. There’s a practical bonus too: a pause gives you time to notice whether you still want it.

I remember waiting two months for a piece of gear I’d had my eye on. By the time I bought it, I’d thought about it so much that it felt like a real event. On other items I waited, and the urge faded. Both outcomes saved me from a bad purchase. That’s my experience, not proof, but I find a waiting list more useful than a shopping cart.

Try this: Start a “wait list” on your phone. Add anything you want that isn’t urgent, and look at the list again in two weeks.

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5. Ask how a purchase will change your everyday life

The authors suggest thinking about how the small, ordinary features of a purchase will affect your day-to-day life. The big feature grabs your attention in the store. The small daily ones are what you live with.

Here’s an example of my own. A larger house might feel great, but if it means a much longer drive to work every day, you’ll feel that drive far more often than you’ll enjoy the extra room. Before any big purchase, picture an ordinary Tuesday with it. What changes, and how often?

Try this: Before your next big purchase, write down three ways it will change an ordinary weekday.

6. Be careful with comparison shopping

This one surprised me. The authors suggest being wary of comparison shopping. The way I read it, comparing options side by side can make you focus on features that stand out on a spec sheet but don’t matter much once you own the thing. That’s my interpretation, so treat it as such.

I remember spending hours comparing two almost identical products, then forgetting all the differences within a week. Now I decide on two or three things that matter to me before I start looking. When something meets those, I stop comparing and buy it. It saves time, and it stops me from chasing features I’ll never use.

Try this: Before you shop for something, write down the two or three things that matter most. Buy the first option that meets them.

7. Ask people how they actually felt after buying it

The authors’ final principle is to pay close attention to the happiness of others. As I read it, other people’s experiences can tell you how a purchase is likely to feel in real life, not just in the ad. A friend who owns the item can tell you what the brochure won’t.

So ask. “Do you still use it?” “What do you wish you’d known?” Their answers are worth more than a dozen glowing reviews. Again, that’s my way of applying the principle, not something the review spells out.

Try this: Before your next purchase over $50, ask one person who owns it if they’re glad they bought it.

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