I highly recommend reading the book The Overspent American by Juliet Schor. This book teaches you how to become more financially responsible. Obviously many of you won’t have the time to read such an interesting and helpful book so I will summarize what I feel are the most important points. Nevertheless, you should read the entire book if you want to learn as much as you can about how to combat bad consumption behaviors. Remember, book summaries are always helpful but never entirely good enough.

Following Schor’s advice will surely lead you to a better management of your finances, something that takes even more precedence in such grim economic times.

Here are some important points from the book:

Chapter 1- Introduction: Middle and upper class Americans are more likely to spend far more than they earn. Some of the reasons stem from a competitive desire to keep up with others to a growing disparity between the income of the top 20% and the bottom 20%.

Chapter 2- Communicating With Commodities: How What We Buy Speaks Volumes: People possess items according to income levels. For example, an upper middle class family should have granite countertops or middle class teenagers should have an iPod. Even though this isn’t how the world should work, there are schemas associated with people’s material possessions with how much money they possess as a family or as individuals.

Chapter 3- The Visible Lifestyle: American Symbols of Status: You may feel more inclined to purchase an item if other people of the same neighborhood have it. For example, if everyone on your block owns a Porsche and you drive a Toyota Camry, you may feel additional pressure to buy a Porsche or a vehicle of similar quality.

Chapter 4- When Spending Becomes You: Competitive spending can be dangerous. If your neighbor owns a Porsche Boxster, you may try to purchase a Porsche 911 (a higher quality and more expensive car). If you have a better car you may have higher “prestige” among your neighbors and feel more important in your social standing.

Chapter 5- The Downshifter Next Door: People known as “downshifters” live simpler lives to escape from obsessive materialism and all the stresses that come with it. They believe that you should slow down life and focus on what is meaningful to you and not just waste money on things you really don’t need. In addition, downshifters believe that leisure time should be spent with friends and family and not on particular items. Downshifters tend to negate non-essential items and to not buy impulsively.

Chapter 6- Learning Diderot’s Lessons: Stopping The Upward Creep of Desire: In this chapter, Schor offers nine principles (listed below) of advice to guide in safer and more responsible consumption behaviors.

Principle 1- Controlling Desire: Stay away from places where you’re more tempted to spend money, such as malls or shopping centers. These places produce an inevitable desire to purchase more products that you may not necessarily need. You should also emphasize product durability rather than novelty. If the things you buy keep you emotionally attached to them, it will be easier to not buy new things.

Principle 2- Creating a New Consumer Symbolism: Making Exclusivity Uncool: Ask yourself if you really need to buy this item. If there’s something you really want but don’t actually need, there’s a good chance that you are fantasizing over its symbolic meaning. For example, driving a luxury car may make you seem like a high business executive. What about a remodeled kitchen? You dream of eating proper family dinners. You should analyze how a product will benefit you and not necessarily what it says about you.

Principle 3- Controlling Ourselves: Voluntary Restraints on Competitive Consumption: You should encourage friends and family to curtail their spending habits. Competitive spending leads to higher pressure to consume. You should have agreements with friends and family to limit spending for functions such as weddings, birthdays, baby showers, and other events and rituals. With friends, arrange nights out where you all agree to keep expenditures at a minimum. You could go to a cheaper restaurant to save extra money or do other things at less value.

Principle 4- Learning to Share: Both a Borrower and a Lender Be: Share expensive purchases (lawnmowers, snowblowers, boats, athletic equipment), rent equipment when possible, and go to public libraries for books, CDs and DVDs. Being both a borrower and lender will enable you to save significant money on items you may seldom use.

Principle 5- Deconstruct the Commercial System: Becoming an Educated Consumer: Learn how to properly analyze a commercial or advertisement and separate yourself from their subtle messages. Understand the product and what it actually will do for you rather than falling for the marketing gimmicks.

Principle 6- Avoid “Retail Therapy”: Spending is Addictive: Research has concluded that spending can be highly addictive. If specific behaviors or events lead to a desire to shop, immediately find something else to do or think about.

Principle 7- Decommercialize the Rituals: Holidays and life rituals make us want to consume at higher rates. Holidays, such as Christmas and Halloween, along with various rituals like engagement rings and weddings, have become highly commercialized to the point where many Americans cannot afford to pay for these things. To compensate for such excessive spending during holidays, you should propose to family and friends spending limits on gifts and eating home cooked meals. Diamond engagement rings are not a time-honored tradition but rather rituals created by diamond manufacturers so don’t fall for everything that they claim!

Principle 8- Making Time: Is Work and Spend Working? With a few exceptions, you should acknowledge that the cheaper way to do something is usually more time-consuming. For example, buying food for a home cooked meal may cost less than going to a restaurant but you are spending more time preparing your food. Essentially, you pay for convenience. People who work in stressful and time-consuming jobs usually look for convenience even if it comes at a steeper price. These people don’t have enough time to do things on their own because they are always so busy; at the same time they may be spending more money to save time. If you work long hours and are stressed about your job or the way you manage your time, consider changing your routine. You may actually save money in the end because you are no longer wasting the extra dollars that you have (from working extra hours) on convenience since you have more time to spend to do these things yourself.

Principle 9- The Need for a Coordinated Intervention: Educate yourself on spending solutions and get involved in organizations that focus on consumer issues and ways to combat spending.