The pandemic has taken a massive toll on the economy, which has negatively affected individuals and small businesses alike.
As the economy is recovering from the setback, you might be wondering what, why, and how to make wise decisions when it comes to spending on necessities.
Last updated: Oct. 21, 2021
Know the Difference Between Your Wants and Needs
Distinguishing the difference between wants and needs can be difficult for many people, but if you can successfully prioritize your needs over you wants, you may be able to pay off debt more quickly and efficiently.
While splurging a little can be no problem, buying an expensive new watch or designer shoes can wait. Always make sure that your necessities are paid for, and only start thinking of spending on your wants after you've paid your bills and put money into savings.
When in doubt, don't make impulsive purchases. Instead, think about whether that money can be put to better use for your future.
Learn more: Shopping Mistakes You’re Making and How To Stop
Keep Track of Your Spending
Whether you’re a beginner or an expert at keeping your personal finances in check, it's always a good idea to keep track of your spending. Whether it’s a pack of gum or a bottle of water, knowing how much you spend daily is the key to successful financial planning. You'll be surprised at how quickly small and unnoticeable expenses can build up -- especially if you use a credit card.
To know and understand your financial needs, first, you need to take time and observe your weekly and monthly spending habits. Though it's tough, you need to go through your monthly credit card statements and view the charges. It may be hard at first, but taking some time to track your finances regularly will be a paving stone to your financial success.
Try using cash when running day-to-day errands. You will be more cautious of spending when you physically see your money being spent.
Buy Local To Support Your Community
Supporting locally-made products and local businesses has a greater impact on you and your community than you might imagine.
Local businesses are passionate about their customers, often giving their communities personalized and excellent shopping experiences. Supporting these businesses shapes and bolsters entrepreneurial skills within the community, allowing business owners to expand and grow -- which, in turn brings money back to the communities that you work and live in.
Buy Generic Without Sacrificing Quality
Name brands might be more appealing due to their colorful packaging and well-known credibility, but why waste money when you can purchase products with the exact same ingredients at a fraction of the cost?
Generic brands have been regarded by many as containing lower quality ingredients and not being as well-made. But that's not true -- in fact, some generics are exactly the same as name brand products. At Costco, for instance, some of the products in the store's Kirkland line are made by companies such as Kimberly-Clark and Duracell.
When in doubt about purchasing generic brand food or medication, read the ingredients list on the back of the package. The similarities might shock you.
Related: Best and Worst Things to Buy Generic
Always, Always, Always Save Up!
If you're the type of person to spend your money first and save up what’s left after, now's the time to make a change. Set a reasonable amount that you'd like to save weekly or monthly and make sure that that money's not spent on something elsewhere.
You may want to check if your bank offers the option to automatically transfer a set amount from your checking account to your savings account every month. Automating your savings may make setting aside money easier.
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This article originally appeared on GOBankingRates.com: How and Where To Spend Wisely as the Economy Recovers From the Pandemic