Distinguish between Wants and Needs: If you don't confuse wants and needs, you'll save a lot of money. Needs are easy to identify—they’re items required for survival like shelter, food, clothing, and transportation. Wants are those things that enhance or possibly improve our family life. A car is a need. A $40,000 sport utility vehicle is a want unless it’s necessary for your business, even if a lot of people don’t see it that way.

There may be different reasons for such behavior. Perhaps it’s due to the booming economy, "keeping up with the Jonson’s", or simply ego. Regardless of the reason, many of us seem to insist on the biggest and the best, no matter what the cost.

This goes a long way in helping to avoid the silly purchases of things you rarely or never use. Before you buy something, especially items with big price tags, borrow one, rent one, or try one out before you plunk down the cash.

You feel that you absolutely must have a new Jet Ski, at a cost of $4500 (and that is before financing and taxes). You go to the beach, rent one, and 45 minutes into a one-hour rental, you find yourself saying, "Geez, this is a long hour." Hence, this way, you would have saved more than $4500 (perhaps a year's worth of college fees for one of your kids!)