Spending To Save: How To Turn Shopping Into Investing

Melissa Davidson  | 

We tend to treat major purchases like houses, cars, and degrees as “special” because of the price tag. They are indeed special and can definitely be good investments. But what about the smaller purchases that also have a big impact on your life? They are important too, especially when it comes to your pocketbook.

Even though buying things like a new bed, a better toothbrush, a pair of jeans, or a more efficient vacuum don’t carry the same price tag as a new home, they can still be thought of as investment assets. Only, instead of having a good resale value or paying quarterly dividends, these sorts of everyday investments save you money over their lifespan. They provide utility and a compounding value in cash not spent, rather than adding cash to your portfolio. If you do your shopping with a credit card, it becomes even easier to turn routine spending into investing — if you do it correctly.

So, how can you retrain your brain and your budget to turn “shopping” into “investing”?

Investing 101: Spending Money to Save Money

All investing follows a similar pattern: you spend money now, under the assumption that you will get more later. While that normally relies on compound interest or a growth in value (appreciation), it is also possible to invest in something that helps you avoid spending money. When that “something” is a necessity — a product or service you were going to have to buy anyway — being smart about how you purchase it can turn it into a money-saving investment.

For example, buying a new bed could be considered both an investment and a necessity. We spend one-third of our time sleeping, so it makes sense to buy a good quality mattress that you’ll likely be using for the next 15-20 years. A good night’s sleep could be considered priceless, since it affects your health, your mood, your ability to work — basically your entire life. Getting enough quality sleep can make you more productive and healthier, saving you money on medical bills while increasing your ability to go out and earn. Sure, that mattress isn’t going to turn into a hefty lump sum when you are done with it, but the value it provides while you are using it does translate into serious money in a different way.

It’s worth it to pay for a more premium product when you’ll get at least a decade of use out of it instead of buying something that’s cheap. You’d probably have to replace the bed anyway in a couple of years because it’s cheap, uncomfortable or falling apart. Replacing cheap items more frequently can end up costing more than buying a more expensive, but higher quality item in the first place, not to mention the side benefits to your health and happiness that accumulate over time.

When you shop smarter and more strategically, instead of impulse buying, you’ll be better off down the road. And it doesn’t just apply to mattresses: take a good hard look at the sorts of things you use (and maybe take for granted) every day. How does your wardrobe, your shoes, your computer, your recliner, your laundry detergent, impact your quality of life? There’s a good chance that being a little more deliberate about these things could end up saving you more than you might expect.

Take Advantage of Sales

A quality product doesn’t have to cost an arm and leg. Many stores and online retailers heavily promote sales around the holidays. A good time to look is during the major holidays, such as Labor Day, President’s Day, Fourth of July and Memorial Day.

In May, mattresses are often marked down in showrooms. In January, you can purchase discounted bedding at “white sales.”

Another example is the purchase of a new grill and patio furniture. You wouldn’t buy these items at the height of the summer season. By late September, the old stock gives way to the new. With summer in the rearview mirror, many stores want to unload their inventory.

Unlike more traditional investments like stocks or bonds, consumer goods routinely go on sale, or come with other benefits like warranties, or even can be purchased with a credit cards, potentially earning you points and rewards. With a little smart shopping and planning ahead, you can turn a spending spree from a costly indulgence into an investment that pays its own kind of dividends, saving you money down the road and possibly bringing you that much closer to a free rewards vacation. Take advantage of this opportunity.

Shopping Around Isn’t Just About Prices

Turning your shopping list into an investment project can be as simple as changing how you think about cost and value.  A well-fitting pair of jeans could last you a decade. Many people will willingly spend $250 for premium denim and don’t consider it a waste of money. The cost per wear could actually be worth the investment because they last longer and fit better than cheap jeans. That doesn’t mean expensive jeans are automatically “better” than cheaper jeans, it just means that looking past the price tag can help you identify a good long-term item, rather than a short-term savings.

Some investments command a premium, while others can be acquired on the cheap.

If you have the money, it’s not a huge deal to go running to the nearest retail giant or exclusive boutique, as long as you know what to look for in the products you consider. As long as the long term value is there, making the more expensive choice can pay for itself.

If you insist on being frugal with all your shopping, you can still hit the thrift shops, garage sales, or online auction sites, and still uncover high quality, durable items without the high upfront cost. Again, the important thing isn’t just the price tag, but the underlying value you get from making the purchase. Buying a lot of cheap clothes at deep discounts doesn’t really save you much if you constantly must replace your second-hand and second-rate goods.

Use Your Credit Cards Wisely

Even though it can be smart to pay extra for long term value when you go shopping, you still need to be careful about sticking to a budget. Of course, the easiest way to turn shopping into an investment activity is to use your credit card responsibly. Shopping with your credit card can help you build a credit history, earn rewards, and easily track your spending through convenient mobile apps and other personal finance tech.

Making your credit card work for you just requires you budget and plan ahead. If you make small purchases on your credit card, make sure you can pay them off every month. You won’t pay a thing in interest or fees if you do, and you aren’t spending more than you can afford. You can set up an automatic payment plan to ensure you never miss a deadline.  

If you’re going to use a credit card, look for cards that have low introductory interest rates on purchases. Some offer low rates for purchases and balance transfers. Take advantage of rewards credit cards that pay cash back, award travel miles, or accumulate other points rewards on purchases.

Keeping your credit card balances low relative to your credit limit is better for your credit score. Your credit limit is based on your credit history, income and type of card you apply for.

Budget Your Money

Shopping habits reflect your saving and investing habits. When you set a budget and stick to it, you’re effectively building a financial reserve. Here are a few things to consider in managing your personal finances.

  • Track monthly spending
  • Follow a budget
  • Use cash or check rather than a credit card or payment plan when possible
  • Spend your tax refund wisely
  • Invest in your 401k if you have one
  • Use free financial coaching services
  • Open an account at a credit union

The difference between good debt and bad debt is planning. How you spend is entirely up to you, but the last thing you want is the burden of huge credit card debt. Being a smart consumer is a lot like being a good investor; it can also help you be strategic about your credit card use and consumer debt.


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This post was updated September 15, 2017. It was originally published September 19, 2017.