Smart Consumption: How to Spend Wisely

We explore which expenses can be reduced without turning into a miser. Smart consumption is often associated with ecology and responsible resource use: not wasting water or electricity, avoiding plastic bags, and sorting waste. However, it also applies to finances.

Smart consumption is one of the main modern trends. In 2017, the Nobel Prize in Economics was awarded to Richard Thaler for research in behavioral economics — the study of how people spend money, what motivates them to save or spend large sums, and why some react more strongly to marketing tactics than others. Behavioral economics helps people spend more consciously and wisely.

Central banks in many countries have also begun protecting people from financial marketing traps and unnecessary spending. The key is that saving should be reasonable and not turn into unhealthy stinginess. So, what should you save on without compromising quality of life?

1. Impulse Purchases

The main enemy of smart consumption. Most purchases are spontaneous: something attracts us immediately, or a discount catches our attention. Controlling impulses helps avoid unnecessary expenses.

• Use the “delay” option: select items in the store, try them out, and go home or to work for a few hours or a day. Later, you’ll understand whether the purchase is truly necessary.
• Make lists: this ensures you buy only what is needed and prevents food waste.

Daily savings can also be achieved in small ways, like using a reusable bag instead of plastic or filling a personal water bottle. The “100 Things Challenge” suggests limiting personal belongings to 100 items — selling, giving away, or discarding the rest. The point is to rethink spending habits and avoid accumulating unnecessary items.

2. Everyday Expenses

Marketers and merchandisers use tricks to make consumers buy more. Keep these in mind to resist unnecessary spending.

• Read price tags carefully. Red labels may suggest discounts, but not always.
• Check lower and upper shelves. Premium products are placed at eye level; cheaper equivalents may be elsewhere.
• Only put needed items in your basket. Stores separate staple items to encourage movement and impulse buying.
• Verify product weight and volume. Smaller packages may appear cheaper but may not save money in the long run.
• Compare prices. Loyalty cards can create the illusion of savings, but overall costs may be higher.
• Evaluate marketing promotions critically. Bonuses and “buy 8 get 1 free” schemes often lead to unnecessary purchases.

3. Transportation

Transportation is unavoidable, but a personal car is not always the most economical option.

• In large cities, public transport may be more cost-effective. Subscriptions often cover multiple modes of transit.
• If a car is needed occasionally, taxi or ride-hailing services may be cheaper than owning a vehicle due to fuel, maintenance, insurance, and parking costs.
• If owning a car is necessary, choose one that fits your income. Spending no more than a year’s salary is reasonable. Accumulated savings of 6–12 monthly salaries can prevent large loans and quickly restore your budget after a major purchase.

4. Housing

Renting may be more advantageous than taking a mortgage, especially in large cities. However, owning a property provides psychological comfort, security, and long-term stability. Mortgage payments are fixed for many years, while renting allows flexibility if finances change.

5. Credits

Credit is a convenient financial tool but should be used cautiously. Avoid taking loans for unnecessary luxury items. Monthly debt repayments should not exceed 30% of your income, or you risk falling into a debt trap. A balanced approach to credit is a key marker of smart consumption.