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The Real Secrets of Saving Money

NEW YORK ( TheStreet) -- You probably know less about the fundamentals of saving money than you assume.

Discussion of the fundamentals of the economy has come to the forefront because of the current economic crisis. While you may have little control over the economy as an individual, you hold a lot of power over the fundamentals of saving money.

The biggest failure is that most people assume saving money is about paying less for something than you expected. But it's a long-term process of conscious decision-making based on basics.

Amazingly, many people don't adhere to the most obvious fundamental: Make more money than you spend, or spend less than you make. Ultimately you need to live within your means. Beyond this, there are less-obvious rules:

Purchase value

When you buy anything, look at the purchase value rather than the purchase price. The cheapest item will rarely save you the most money in the long run. How long will the item last, how many uses can you get out of it, how well does it do the job?

Spend to save

Be willing to spend on items that save money over time. There is a long list of products that can save money depending on how you live your life. Some examples: a sewing machine, coffee maker, rechargeable batteries, home insulation. These all cost money, but they eventually pay for themselves.

Emergency fund

An emergency fund is the safety net that allows you to both purchase value and spend to save. Without an emergency fund, you live paycheck to paycheck, which forces you to purchase only what is cheapest and needed at that moment. You don't have the monetary security to plan ahead and shop for what is best for your long-term savings when you are worried about having enough money to make it to the next paycheck.


The value of what you buy doesn't stop as soon as you hand over the money for it. How long the item is useful often depends on how well you maintain it. If you buy a lawn mower and store it properly, it's going to have a longer life than if you leave it among the elements. It's like getting regular checkups at the dentist.

Retail price

The only reason you need to pay full retail price is because you didn't have the time or make the effort to get a better deal. There are always discounts available and once you determine what you need, you should spend some time looking for them.

If you have a choice, you should buy used instead of new. While buying used might have been problematic in the past, that is no longer the case with the Internet at your fingers. Craigslist and eBay provide an online flea-market with anything you could ever need. Local stores like consignment shops, Goodwill, local flea markets and garage sales can also be places to find the things you need. Some stores specialize in used items such as sporting goods and designer clothes.

Using the same line of thinking, you shouldn't buy things at all that you can get for free. Be willing to borrow, lend and trade. Use public services like the library. Be willing to list things you may need on sites like to get them at no cost.

What your time is worth

One of the most important fundamentals of saving money that people often forget is knowing what your own time is worth. A simple way to come up with a number is to divide your monthly take-home pay with the number of hours you work each month. You can then determine if the savings are worth the time and effort. If you're only going to save a few dollars when it will take you several hours to do it yourself, then it's not worth your time. Time is money, so understanding what your time is worth can help you make good money-saving decisions.

By embracing these fundamentals, you place yourself in a position where you can make great gains in savings. If you fail to understand that saving money is more than the price you pay at the store, you will find that you're never saving the amount that you thought you would be.

Jeffrey Strain has been a freelance personal finance writer for the past 10 years helping people save money and get their finances in order. He currently owns and runs

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