Spending Money Wisely as a US Consumer

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  • 0:00 Spending in the U.S.
  • 0:56 Budgeting
  • 4:30 Planning
  • 7:05 Protection
  • 8:30 Lesson Summary
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Lesson Transcript
Instructor: Jessica Whittemore

Jessica has taught junior high history and college seminar courses. She has a master's degree in education.

This lesson explores steps necessary to become a wise consumer within the United States. It highlights the importance of a budget, the necessity of planning purchases, and how to protect yourself and your purchases.

Spending in the U.S.

When I went to college, I was taken aback to see my roommate's parents give her a credit card. I was even more shocked when I saw her use it without discretion. We're talking late night pizza at least once a week, new clothes at will, and commandeering every CD from all her favorite boy bands. To say the least, it was not how my family did things.

My college years were much more about just scraping by. To hearken back to those times that happened to teach me a good deal about money management, let's dive into a discussion on spending wisely as a consumer in the United States. Since this is such a broad topic with so many different avenues to travel and different opinions to consider, we're going to narrow our chat down to three categories: budgeting, planned purchasing, and protecting yourself.


Admittedly, I once despised the idea of a budget. The idea of tracking and planning what I was going to spend just seemed like such a killjoy. However, there are benefits that come with having a financial plan, and that's what a budget really is. It's a plan for what you are going to do with the money you have at your disposal. Officially, it's an estimate of income and expenditures for a set period of time. It's looking at how much money you have for a given amount of time and pre-planning how to spend it.

When budgeting, many wise consumers tend to budget on a monthly basis. To illustrate the wisdom in this, let me introduce you to two very different U.S. consumers. We have Beatrice the Budgeter and Sally the Spontaneous.

At the beginning of every year, Beatrice the Budgeter takes a look at her projected income for the year and breaks it down over 12 months. She knows she has some set expenses, like rent, the electric bill, and the sewer bill, so she includes these numbers in each month's figures.

After she has covered these fixed expenses, or expenses that do not fluctuate, she then decides how to allocate the rest of her money. She gives herself a set amount for things like food, clothing, medical fees, and entertainment. After all, even Beatrice the Budgeter likes to go out or see a movie! However, she keeps her spending within the parameters of her budgeted plan. If, on December 5th, she walks into a store and sees the most amazing sweater ever made, but it exceeds her clothing budget by $75, she controls herself, saves all her clothing money in December, then buys that beautiful sweater in January!

As a wise U.S. consumer, Beatrice also budgets for unforeseen emergencies. For example, each month she puts $75 away for car maintenance. That way if a tire leaks or a gasket blows, she has the needed money squirreled away. She won't be caught with an empty piggy bank in one hand and a huge mechanic bill in the other. She's Beatrice the Budgeter, and she has a plan!

The same cannot be said for Sally the Spontaneous. Like her name foretells, Sally doesn't have a money spending plan. She has no budget. Instead, she spends money by the seat of her pants. Yes, she pays her rent and her bills, but the rest of the money is pretty much up for grabs. If Sally comes across a to-die-for sweater, you better believe it's going home with her! After all, she has a pretty good job, so she can afford to spend at will, right?

Regrettably, for Sally, this is not always the case. In fact, her spontaneous ways often get her in trouble. For instance, last month her dog went a bit nutty and ate her phone. Not being due for a new one, she had to scrounge up $500! Unfortunately, she'd already spent her paycheck on rent, utilities, and a killer pair of boots.

Having no budgeted amount for maintenance, and no savings for emergencies, Sally the Spontaneous was forced to whip out a credit card. Now, she's not only paying for the phone, she's paying interest fees! Of course, if this happens every once in awhile, it's not financial suicide. However, if Sally keeps up the pattern, which many Americans do, she'll find herself in a rather precarious fiscal pickle!


Closely linked to budgeting, let's move on to planned purchasing. This is when one avoids impulse buying and researches larger expenditures before purchasing. For this one, we'll employ Beatrice and Sally again.

Although we might not think of it, there's an art to being a wise purchaser. According to the CAG, the Citizen Consumer and Civic Action Group, a wise consumer will research before purchasing. In other words, a wise consumer doesn't just buy something because they see it and like it; they do some leg work first. The more you plan, the more secure your financial standing will be.

To drive this one home, let's compare how Beatrice and Sally bought their newest refrigerators. Sally, being very spontaneous, didn't put much thought into hers. Yes, she knew her old fridge was on its last leg, but beyond that, she didn't give it much more thought. That is, until the day she happened by a big box store and saw the shiny, sleek refrigerator they had on display! With its stainless steel and automatic ice dispenser, it was love at first sight! Never mind that Sally had never heard of its brand name, and never mind that she had no clue about its energy efficiency. Despite having no plan to make a large purchase that day, she grabbed the nearest salesman and had that pretty thing scheduled for home delivery!

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