If there’s any silver lining to this sluggish economy, it’s this: You, the consumer, are back in charge. For most products and services, “you have a lot more power to name your price,” says Nancy Koehn, a retail history professor at Harvard Business School.

The proof? Nearly 70% of Americans have managed to negotiate a better deal on a purchase in recent months, according to America’s Research Group - a 12-percentage-point jump from a year ago. While you’ll still hit walls with certain businesses (don’t expect much luck at the gas station), you’ll find wiggle room now in unexpected places, including health clubs, cell-phone stores, even big-box retailers, says G. Richard Shell, author of “Bargaining for Advantage.”

To gain leverage, you need to know three things: where the industry’s weak spots are, how much competitors are charging and what value you bring. Start with the negotiations here (listed easiest to hardest) - and watch the savings pile up.

Mortgage brokers

The situation: The mortgage industry shed a lot of its job force in the past year, and volume remains low for brokers still standing. Thus they need your business. Use that leverage to cut the broker’s commission when buying your next house.

How to use it: Mortgage brokers get paid by you, by the lender or both - the total compensation had typically been 1% to 2% of the loan amount. But they can get an even higher fee from the lender if they give you a higher interest rate.

For the sake of both transparency and savings, you want to work with someone who will agree up front to how much the fee will be. Interview brokers to see if they’d do this. Then, no need to beat around the bush: “Just ask what their typical commission is and whether they’re willing to negotiate,” says Eric Tyson, author of “Mortgages for Dummies.” These days, on a mortgage of $250,000 you should pay no more than 0.75%, Tyson says - and you may be able to get it to 0.5%. Just make sure that the broker agrees in writing.

How much you can save: $1,250 on a $250,000 loan

Ease: $$$$

Health clubs

The situation: The industry boomed in the late ’90s as 70 million “echo boomers” entered the work force. But growth has since slowed to a trickle. “Now, with the way the economy is going, every club will cut prices to some extent,” says John Spencer Ellis, president of the National Exercise and Sports Trainers Association.

How to use it: Lucky for you, August is one of the industry’s slowest periods. If you’re not yet a member, go in toward the end of the month, when commissioned sales reps are nearing their sales goals. “Tell them straight up that price is an important factor for you,” Spencer Ellis says, “and ask what wiggle room there might be on rates.” You’re most likely to score a break on initiation fees (which typically run $100 to $285), but you may be able to get a deal on monthly fees (usually $40 to $80) too.

Already a member? Keep on eye out for promotions from the club and its competitors. Request a price match. Or ask if they can give a discount for referring someone.

How much you can save: $20 to $140 on initiation fees; $60 to $120 a year on rates

Ease: $$$

Cell-phone service

The situation: These days, cell-phone carriers must spend heavily to attract new customers, says Mark Donovan, a mobile analyst with comScore M:Metrics. The companies won’t earn back what they spent unless you stick around for a while. So if your contract has lapsed (or is about to), you’ve got power.

How to use it: Look at websites of all the major carriers for enrollment deals. If you’re willing to switch, find an independent retailer that represents multiple providers, as reps there are empowered to offer the best incentives, says Donovan. They may also have unadvertised plans. Visit at the end of the month.

Rather stick with your current carrier? Call and explain that you’re getting to the end of your contract; that you’ve noticed Company B is dangling more minutes for a better price. Can they do better? If not, say you’d like to speak to the retentions department because you’re thinking of canceling - and start the conversation again.

How much you can save: Up to $360 a year

Ease: $$

Cable-TV, telephone and Internet services

The situation: Phone and cable companies are locked in a turf war. Yet providers are starting to suffer from the rising number of customers who aren’t paying their bills. No wonder, with monthly fees for digital cable TV starting around $60 a month; high-speed-cable Internet, $45; and bundles with phone, around $110.

How to use it: Whether you’re an existing customer or shopping around, play the companies against each other by mentioning competitors’ rates and saying you’d consider switching to save money. See if locking in for a year or more will get you a better price. If you don’t succeed, call again and talk to someone else - or ask for the retentions department.

How much you can save: Up to $480 a year

Ease: $$

Electronics, clothing and other stuff

The situation: Though retail sales got a small boost this summer thanks to those IRS checks, they’ve been generally sluggish since January. As a result, consumers have succeeded in getting hundreds knocked off at Best Buy, Home Depot, even at tony apparel boutiques.

How to use it: Use a comparison-shopping site such as Shopzilla.com to find the lowest price on the item first. Bring a printout to the store. Once there, “the key is identifying who has the authority to give you a discount,” says Shell. In mega-chain stores, few people have such power. Ask a clerk if he or she is allowed to do this; if not, kindly request to speak to a supervisor. When you get to the right person, ask what he or she can do for you. Or show the printout and ask if the store can beat that price by 15%. You’ll find this strategy works best on big-ticket items, says Shell.

Don’t take it lying down. With laws spelling out your rights, and with standard appeals processes in place, you stand a chance of fighting back and winning.

Everyone visits a doctor sooner or later, and these trips don’t come at a small cost. That’s why you have health insurance. But what happens when you know you need care and your insurance company says you don’t? Most people are taken by surprise when a health insurance claim is denied.

Some denials are a consequence of actions within your control. For example, health plans often deny or return pre-authorization requests because of missing data. You can avoid this by ensuring your pre-authorization requests include accurate patient information. Ask your doctor to check diagnosis and procedure (ICD9) codes for accuracy.

Good documentation can also help you avoid denials. Though it may seem paranoid, write down the name of every person you talk to in reference to your health insurance problems and keep backups of all correspondence and paperwork. This documentation can be invaluable if an insurer denies your claim.

Additionally, it is important to know the health plan’s requirements. Most patients do not read the handbooks their health plans provide, according to a study by the U.S. General Accounting Office, so they’re unfamiliar with the plans’ requirements. Consequently, many appeals stem from ignorance. Make sure ahead of time that the treatment you plan to receive is covered under your insurance.

Insurers offer buyers a new resource for uncovering vehicles’ hidden histories of theft or damage. It’s a great start, but nothing replaces a good inspection.

The National Insurance Crime Bureau has unveiled an online database into which consumers can plug — free — a vehicle identification number to learn whether a car had been stolen or badly damaged in a wreck, flood or fire.

VINCheck looks like a bargain compared with Carfax’s Vehicle History Report (single report $24.99, 10 reports $29.99, unlimited use for $34.99, reports posted free by many auto dealers online) or Experian’s AutoCheck Vehicle History Report (single report $19.99, 60-day unlimited use $24.99).

A vehicle’s history can mean life or death, says Rosemary Shahan, the president of the nonprofit Consumers for Auto Reliability and Safety, based in Sacramento, Calif. Millions of vehicles routinely are offered for sale after they’ve been cleaned up and repaired after having been declared a total loss from a crash, fire or natural disaster. A half-million cars wrecked by Hurricane Katrina, for instance, were salvaged and resold after they’d marinated in a stew of petrochemicals and bacteria, Shahan says.

“There is no way they could be made safe,” she says. That’s because crucial electronic circuits were likely damaged. A previously flooded engine could die in traffic; brakes could give out under stress; airbags could fail to deploy in a crash.

But the rap on the crime bureau’s free service is that it has holes. What it has: claims data from 76% of U.S. auto insurers, updated instantly. What’s missing: claims from insurers that don’t belong to the bureau, wrecked vehicles for which no insurance claim was filed, vehicles from rental fleets and those from fleets self-insured by the companies that owned them.

On April 15, 2018, Johnny Behave wakes up feeling pleased with himself. His tax return was filed weeks ago, thanks to the IRS’ Insta-File service, which e-mailed him a completed form for his approval. One click and his taxes were done. He has no worries about having enough money for his kids’ college or his own retirement because his employer’s Save-a-Bundle plan automatically suctions money from his paycheck and hikes the withdrawal rate as his salary rises.

Once a year, Behave’s cable company, cell-phone provider and credit-card issuer send him a summary of what he watched, whom he called and what he bought; for a modest fee, a service checks those reports to see if he’s getting the best deal. To top it off, his gas is free. The government grants every American family a 30-gallon monthly allowance. But if the Behave family uses more, they pay $20 a gallon. They rarely have to pay.

If you were a lawmaker and wanted Americans to do what’s good for them, you’d have two classic options. You could outlaw imprudent behavior. (If you think that always works, note how many drivers obey the speed limit next time you’re on the highway.) Or you might dangle financial rewards for doing the right thing and hope the free market will do the rest.

Or you could turn to a third option (the one carried to a tongue-and-cheek extreme in the futuristic scenario above): Let people freely make their own decisions, but rig the system so they’re more likely to make good moves in spite of themselves.

That third option is the intriguing brainchild of a coalition of economists, psychologists and policy wonks steeped in behavioral economics - a once upstart discipline that’s now accepted wisdom among financial planners and investment managers.

If you’re a longtime Money reader, you’re already familiar with the field, which studies how psychology often gets in the way of wise financial decisions. You know that recognizing those blind spots can be the best way to avoid wrongheaded money moves in your own life.

Now that same research is seeping from personal finance into public policy. Right now, the movement’s intellectual spearpoint is the book “Nudge: Improving Decisions About Health, Wealth, and Happiness” by Harvard law professor Cass Sunstein and University of Chicago economist Richard Thaler, whose research into savings behavior played a role in shaping the 2006 law that made automatic 401(k) enrollment possible.

But Thaler and Sunstein are not alone. Predictably Irrational by Dan Ariely, a behavioral economist at Duke and MIT, spent 11 weeks on the New York Times bestseller list this year. And experts at the Brookings Institution, the National Bureau of Economic Research, the Federal Trade Commission and the Federal Reserve Bank of Boston have joined the movement to use behavioral economics to get you to lower your energy bills, drive less and make your money last in retirement.

Even the presidential candidates’ platforms show signs of the field’s influence. “Both campaigns understand that markets work but don’t fully get the job done,” says Arthur Brooks, who teaches public policy at Syracuse University.

To be sure, behavioral economics is still in its political infancy. But get ready. You’re going to be on the receiving end of it in the years ahead.

Owning up to your worst instincts

Thirty years ago, economists and psychologists began challenging one of the central tenets of traditional economics: that people are rational decision makers who always act in their own best interests.

They started with the inconvenient fact that people are only sporadically rational and often don’t act in their best interests. They then set out to investigate the psyche’s most puzzling tendencies.

We humans are, for example, irrationally averse to loss. In a classic behavioralist experiment, subjects are asked to choose between a certain $3,000 loss and an 80% chance of losing $4,000 and 20% chance of losing nothing. Most people pick the second option, even though it’s not the mathematically sound choice. (An 80% chance of losing $4,000 works out to an average loss of $3,200; better to lose an even $3,000.) But the idea of accepting a loss when there’s even a slight chance of avoiding it runs against our instincts.

Similarly, we tend to be inordinately wary of taking any action that might turn out to be wrong, a habit the behavioralists call “status quo bias” or what the rest of us call inertia. It’s why some 30% of employees eligible for 401(k) plans never participate, and why the overwhelming majority of 401(k) participants never make a move to rebalance their portfolios.

The catalogue of psychological blind spots goes on: We place too much value on immediate rewards and too little on deferred rewards, one reason it’s so hard to save for the future and so easy to over-spend on credit cards.

And when faced with a shortage of information, we have a peculiar habit of attaching significance to whatever data are handy (”anchoring”). That’s why investors tell themselves they’ll hang on to a losing stock until it gets back to even, and why homeowners still insist that the value of their home is what their neighbor’s sold for in 2006.

Making faults a virtue

While such tendencies may be unproductive, they’re not unpredictable. Therein lies the entrée to public policy. To turn irrational human beings into financially astute citizens, policymakers simply have to frame a set of options so that people’s wayward instincts guide them toward the socially desirable choice.

About 10 years ago, based on the work of Thaler and others, behavioralists began to theorize that this kind of economic jiujitsu could help solve the problem of low participation in 401(k) plans.

As you know, even a modestly generous 401(k) comes with tax breaks and free employer matches so attractive that any rational employee would enroll. Still, some 30% of eligible workers don’t. The solution: Instead of trying to persuade employees to sign up, employers would simply enroll them without their permission and let them quit. In other words, make inertia work for employees, not against them.

The prediction was that far fewer people would opt out of the new plan than were failing to opt into the old one. Sure enough, a 2001 study of one 401(k) by Brigitte Madrian of Harvard and Dennis Shea of Penn State found that automatic enrollment lifted participation rates for new hires from 65% of employees after 36 months on the job to 98%.

Five years later, as part of the Pension Protection Act, Congress adopted this approach and allowed any company to automatically enroll workers in a 401(k) - and the notion that behavioral economics can actually help solve social problems suddenly had legs.

“Our ideas are gaining traction because they are based on common sense and a description of behavior that everyone, from voters to politicians can relate to,” says Thaler. Democratic presidential nominee Barack Obama borrowed the automatic enrollment provision for his campaign’s retirement savings program; under his proposal, companies without savings plans would be required to set up employees in a direct-deposit IRA. Workers could opt out, but few probably would.

And savings plans are just the beginning for behavioralists. “The problem is the market doesn’t protect us from our own folly,” says psychologist Daniel Kahneman, who won the Nobel Prize for his work on behavioral economics in 2002. “If what we want is to improve people’s choices without eliminating their freedom, then I think behavioral economics is very helpful.”

Fixing retirement security

One problem with automatic enrollment is that once enrolled, workers tend to keep saving at the default level, typically 3% of pay. That’s not enough for a healthy retirement.

A solution, already in place at hundreds of companies, is a system conceived by Thaler and UCLA’s Shlomo Benartzi called Save More Tomorrow. Taking advantage of the fact that you find it easier to promise to tighten your belt in the future than to do it today, the program asks you to agree to boost your savings automatically with every future raise. In one 401(k) that Thaler studied, three years after Save More Tomorrow was introduced, the average savings rate had risen from 3.5% to 13.6%.

Another serious issue arises once you retire: Since you don’t know how long you’ll live, how can you make sure that your savings will last your lifetime? Immediate annuities - insurance contracts that promise to pay you a check a month for life - are the obvious answer. But annuities require a huge up-front investment, and policymakers have yet to figure out how to get retirees to buy them.

Enter the behavioralist solution, proposed by economists at the Brookings Institution. Companies should automatically direct a portion of retirees’ 401(k) assets into an immediate annuity for the first two years of retirement with the option to cancel at that point. Once seniors got used to the security of a monthly check, the researchers believe, status quo bias would take over and few retirees would cancel.

Fighting global warming

One reason it’s hard to reduce energy usage at home, say Thaler and Sunstein, is that we don’t connect the immediate relief of turning up the air conditioning, say, to the pain of paying the utility bill four weeks later.

Their solution: instant feedback. Utilities should give every household an indicator light that would track electricity, gas and oil use. Start sucking up more energy than your target - say, the average of your neighbors - and you get a red warning light. Moderate the thermostat, and eventually the indicator blinks off. Just being able to track your energy burn makes you a more efficient user.

Experimenting with such a system last year, Southern California Edison found that homeowners cut their energy use during peak hours by 40% in just a few weeks. The program might be even more effective if the warning light were visible from the street; social pressure, Thaler and Sunstein maintain, is a powerful behavioral prod in its own right.

Behavioral incentives can work with high-profile polluters too. Both McCain and Obama endorse versions of a system called cap-and-trade, in which the government would limit overall greenhouse gas emissions and issue pollution permits to major emitters like utilities and manufacturers. Companies that exceeded their allotment would have to buy extra permits from energy misers who have more than they need.

Obama would auction off the permits. McCain would give them away - which may actually be more behaviorally astute. According to behavioral economist Ariely, people (and presumably companies) tend to quickly “anchor” on free as the “right” price. We perceive going from free to some price as harder than going from inexpensive to more expensive. “It turns out that it’s incredibly painful to pay for something that was once free,” says Ariely. Result: a nudge to pollute less.

Reducing health-care bureaucracy

While behavioral economics hasn’t offered much in the way of solutions to the nation’s dysfunctional health-care system, research suggests where possible solutions might come from.

For example, any self-respecting behavioralist could have predicted that when asked to choose a Medicare Part D drug plan, millions of seniors would fail to pick a plan and be shunted into the default. Recognizing that, more states would have followed Maine’s lead in creating an intelligent default choice that addressed the Medicare participants’ needs. In that state, all seniors who didn’t select a plan were defaulted into plans that covered at least 90% of drug costs; in other states, such seniors were assigned randomly and ended up paying, on average, $700 more than needed.

In the end, of course, behavioral economics has its limitations. The chief one is that while every true behavioral program is voluntary, each is designed so that citizens default to the “right” course. But who decides what’s right?

And Richard Pildes, a law professor at New York University, points out that behavioral economic techniques work only where there’s consensus. “Everyone agrees that people should save more,” he says. “But when discussion moves to thornier issues, we could end up debating the default forever.”

From firsthand experience, Johnny Behave knows that this new world can be annoying. Between his daughter spending hours on Mynextspace and his son jumping around in front of Wii 3, the energy warning light in his house is always glowing red. And because he programmed his fridge last Sunday for healthy eating, he’s stuck with fat-free yogurt this morning even though he really wanted bacon. When he heads off to work in his SUV, he must sport a PLEASE HONK. I POLLUTE bumper sticker. Still, as beeping horns follow him down the highway, Behave has to admit that the air is cleaner, his finances are sounder and his life is, yes, just a little more rational

While summer is a great time to be a kid, it is a tough time to be a retailer, or a parent.

Most merchants typically gear up for the back-to-school shopping crowd to hit their stores around mid-July, lasting through early September. But this year, retailers are bracing for a particularly slow season. With a sluggish economy and soaring expenses, families are cutting back on spending during one of the most important shopping periods of the year for stores.

Even though total back-to-school spending for Kindergarten through 12th grade this year is estimated to reach $20.1 billion, according to the National Retail Federation’s 2008 Back to School Consumer Intentions and Actions Survey, spending in most categories will be flat.

The survey found that families with school-aged children will spend 5% more this year on back-to-school purchases, or $594.24 per family, compared to $563.49 last year, largely driven by sales of electronics like computers and cell phones, spurred by economic stimulus payments.

But back-to-college spending, which has helped buoy retail sales for the past five years, will drop 7% this year, from an average of $641.56 per person last year to $599.38 this year, the survey said.

Retailers reach out

Because consumers are downscaling in the face of rising gas and food prices, retailers must be aggressive to drive sales, according to Ken Perkins, president of sales tracking firm Retail Metrics. That means more markdowns and promotions to bring customers into stores.

“Retailers are going to have to be very competitive on price,” Perkins said.

Department stores and mall-based retailers, like Abercrombie & Fitch (ANF) and American Eagle Outfitters (AEO) are going to have the greatest difficulty drawing in consumers, according to Perkins. While discount retailers like T.J. Maxx (TJX, Fortune 500) and Ross (ROST, Fortune 500), may fare better in the current climate.

A whopping 73% of consumers will be heading to discount stores for their back-to-school gear this year, up from 67.6% last year, according to the NRF survey.

Retail giants Wal-Mart (WMT, Fortune 500) and Target (TGT, Fortune 500) have already started their back-to-school promotions in an attempt to reach out to cash-strapped consumers.

“We know our customers are facing tough economic times,” said Shannon Frederick a spokeswoman for Wal-Mart, “and our customers are depending on us for low prices.”

The world’s largest retailer is promoting 5 to 15 cent pocket folders, pens and glue for under a dollar and back packs for less than $10.

Shoppers get smart

“This back-to-school season is going to be one of intense bargain hunting,” Perkins confirmed.

And with more sales and promotions around, shoppers are getting savvy about the scoring the best possible deals.

That means comparison shopping online will be even more popular among those looking for low prices on back-to-school gear while struggling with rising gas prices.

Brad Wilson, founder of bradsdeals.com a site that shares shopping steals, says that this year there are tons of great online deals for consumers willing to shop around. On top of those deals, an abundance of promotional coupons can make back-to-school necessities even less expensive, for those willing to put in the time.

“If I was going to buy a laptop, I would buy it at dell.com or hp.com with a coupon,” Wilson recommends. For books, Wilson suggests using a 30% off coupon for Borders or 15% off at Barnes & Noble, current promotions easily found online.

Wilson’s top picks this season? A $100 graphing calculator from Texas Instruments for $24.99 after two mail-in rebates from Office Depot coupled with Office Depot’s $25-off coupon code listed on Wilson’s Web site.

And a free iPod touch or iPod nano with the purchase of a Mac computer before September 15 from Apple’s online education store. College students, teachers, administrators and staff also qualify for discounted prices on Apple computers, making that deal a “total no-brainer,” Wilson said.

Question: Both my husband and I have 401(k)s that are annuities backed by mutual funds. The returns, compared to our rollover IRAs in Fidelity funds, are unimpressive. What is the best strategy for dealing with a lousy 401(k)?

The Mole’s Answer: Unfortunately, I see this far too often in my practice. Let me explain why so many companies offer lousy 401(k) plans, and then I’ll give you some practical advice on moving forward.

It’s relatively expensive for an employer to have a 401(k) plan administered. There is quite a bit of record keeping and compliance issues involved. But many custodians will offer these services to employers for little or no cost - to the employer, that is.

The 401(k) providers don’t actually care how they make money, just as long as they make a tidy profit. That’s why so many providers offer the employer low-cost plans and make up the difference by offering the employees very expensive mutual fund options. These 401(k) providers make a bundle off of the really lousy choices they offer the employees.

Smaller employers especially can’t afford to pay the hefty administrative fees associated with these plans and I’ve seen plans that average fees of 2% - 3% annually. Highway robbery, if you ask me.

A plan like yours that offers annuities within a 401(k) is actually making you pay for the needless tax-deferral within a tax-deferred account. In essence, it’s like wearing a raincoat inside your house. I’ve seen annuity offerings more often within the not-for-profit 403(b) plans, but they can be offered in 401(k) plans as well, as is the case with yours.

My first piece of advice is to start with your employer. This is contingent upon having the right relationship with your employer and bringing the matter up to the owner or the human resources department. I’ve found that many employers have no idea that they’ve provided their employees with such lame options. Once they know, they may be willing to make some changes.

If the employer changing 401(k) providers isn’t an option, here are some practical tips:

Never miss out on the employer match. I’ve seen some pretty pathetic 401(k) plans, but I’ve never seen one so bad where it made sense to pass on the free money the employer is willing to shell out via a partial matching of the employee’s contribution.

Look into IRAs. Once you’ve contributed to the employer’s matching level, see if you are eligible for an IRA contribution. If so, you can contribute $5,000 this year ($6,000 if you are 50 or older) and put these funds in lower-cost, more diversified options that you can find at providers like Fidelity or Vanguard.

Consider bonds. Hopefully your 401(k) account is only part of your nest egg. Build your total portfolio using your 401(k) as part of your retirement and look at your entire asset allocation. Bonds are usually best suited for your tax-deferred account, as where you locate your assets is critical. Sometimes you can find a bond fund in your offerings that is less outrageously expensive than the stock funds.

Favor index funds. If you are buying an equity fund, see if your plan offers some kind of index fund. Often an S&P 500 index fund with an expense ratio of 1.00% or more is still better than an active fund with a 2.00% expense ratio. I don’t like holding just the largest 500 domestic companies, and prefer to own the total stock market. But if you need to, you can go outside your plan to buy a fund like the Vanguard Extended Market Index fund (VEXMX). This owns all U.S. stocks except the S&P 500 so it works as a great supplement to an S&P 500 fund. Buying about $1 for every $4 you have in an S&P 500 fund will approximate the total U.S. stock market.

Opt for a rollover. Roll out these funds to an IRA the minute you leave your employer. That’s the only way to get out of these really lousy selections. Make sure you do a direct rollover so you don’t inadvertently create a taxable event.

For more information on what to do when you are captive to a lousy retirement plan, I suggest you read Dan Solin’s, “The Smartest 401(k) Book You’ll Ever Read.”

Short of quitting your job, the only strategy is to minimize the negative impact a lousy 401(k) plan will have on your nest egg. Keep the damage to a minimum while you are at this employer and then run for the hills as soon as you leave.

As a test, MSN Money puts a household’s food budget on a strict diet. The experiment has its downsides (no more rice, please!) but shows how to take a bite out of grocery bills.

Feed a family of four for $100 a week — no coupons, no backyard garden or mystery meat.

That was the challenge MSN Money gave me (and, indirectly, my husband and two children).

I knew it wouldn’t be easy. Even a food stamp allowance for a family of four is $117. With gas and corn prices surging, the retail costs of basic items such as milk, apples, pork chops and potatoes have gone up 8.5% in the past year, according to the most recent American Farm Bureau Federation’s Marketbasket Survey.

• Talk back: How do you cut your grocery bill?

But with a little planning and the help of a couple of nutritionists, I figured out what to buy and what to leave on the shelf. And no, we didn’t eat beans or pasta every night. The rules:

• All of the food had to come from a major national grocery chain. No low-priced ethnic markets or bag-your-own-groceries warehouse stores. I could have saved even more, but this had to be something everyone could do.

• No coupons. I’m not a big coupon user anyway, and besides, many of these are for things that are too fattening or just too expensive to begin with.

• No cleaning products or paper goods. There wasn’t enough room in the budget.

• The meals I served had to be relatively healthful. Otherwise, what’s the point?

Did we make it?

First, let’s say that any reduction in my grocery bill was welcome, as most weeks we spend nearly $250 at a grocery store. That’s well above the $182 budget the U.S. government considers “moderate” for a family of our size and ages.Spending less than half what we normally do was tough. A $100 budget gave us $1.19 a meal per person, obviously not enough for dinners or coffees out and barely enough to put decent meat on our plates.

Did we spend $100 or less? No.

I cheated twice, and both were on items I wasn’t proud of.

The first time, I bought a sodium-packed $1.07 bean burrito at a fast-food place as I rushed off starving to an appointment for my son. The second time was at the end of the week, when I caved to several minutes of back-seat whining for soft-serve ice cream.

Those purchases brought my total expenditures for the week to $105.03, meaning I overspent by about 6 cents a meal per person.

The experts weigh in

With a $100 budget, there’s no room for error. Every meal and snack has to be meticulously planned, and the whole family has to eat it. In my case, with two adults, a toddler and a 4-year-old, that’s a pretty wide swing.”That’s a real challenge,” says Elizabeth Somer, a registered dietitian and the author of “10 Habits That Mess Up a Woman’s Diet.”

She told me to use meat sparingly. Instead of a steak, I should buy extra-lean beef stew meat and cook it in a soup or stew.

“Americans are obsessed with protein, but it’s the one nutrient we actually get too much of,” Somer said.

Some people think target-date funds are too conservative, but lousy investors might need to be saved from themselves.

Question: I’m 28 and I struggle with how to allocate my 401(k) contributions among different types of investments. The target-date retirement funds in my plan would have someone my age invest 10% of their portfolio in bonds and the rest in various large- and small-cap index funds. But I think someone my age is better off focusing mostly on growth funds as well as foreign and emerging market funds. Seems to me that if I take the target-fund approach, I’ll be giving up a lot of potential return and money. What do you think? —Raymond Longshore, Gainesville, Florida

Answer: I think you’re a perfect example of someone who’s a lousy candidate for a target-date retirement fund and who ought to invest on his own.

Wait a minute. On second thought, you may be a perfect example of someone who really should be using a target-date fund instead of creating your own investment strategy.

I understand that on the face of it, that assessment sounds absurd. After all, you can’t be two diametrically opposed things at once. So let me explain my reasoning, starting with why I think you’re a lousy candidate for a target-date fund.

One of the big advantages of a target fund is that it frees you from having to make investment decisions on your own. You select a target fund with a date that roughly corresponds to the year you plan to retire - 2010, 2020, 2030, whatever - and you get a completely diversified portfolio of stocks and bonds. It’s a no-brainer way to invest. In order to provide that simplicity, the fund sets a stocks-bond allocation that it deems appropriate for someone of a given age.

Although not all target funds give you the same mix of stocks and bonds, most target funds designed for someone of your tender age would have a portfolio of roughly 85% to 90% in stocks and the rest in bonds. As you get older, that mix would gradually shift more toward bonds.

But the very things that make target-funds attractive - simplicity and a ready-made asset mix based on age - can also be drawbacks in some cases. Clearly, not everyone the same age has the same risk tolerance or wants to pursue the same investment strategy. You, for example, appear willing to take more risk by devoting more of your portfolio to stocks and by tilting your mix more toward volatile growth and emerging markets stocks.

For someone like you, investing in a target-date fund would be a bit like buying an off-the-rack suit when what you really want is a custom fit. So given your strong feelings about investing and the fact that your idea of how your money should be invested conflicts with what a target-fund would do, it would seem pretty clear that a target fund isn’t the way to go and you should create a portfolio on your own.

Okay, so given all that, how can I also say that maybe you ought to go with a target fund?

Well, as much as I admire your eagerness to take control of your investing strategy and create your own custom-made suit, I have my doubts about how good a tailor you are. Specifically, I worry that left to your own devices, you might sabotage yourself.

For example, you say you want an all- or virtually all-stock portfolio. Fine. I remember that “all stocks all the time” was the way to go back in the nifty ‘90s when stocks were churning out near 20% annualized gains.

But even many of the most gung-ho stock investors lost their nerve and bailed out when the boom turned to bust. Maybe you feel that won’t be the case for you since you’ve already seen the stock market drop a good 20% from last October’s highs. But what you have to ask yourself is how you would feel if stocks dropped that much again, and then even more. In the last bear market, the Standard & Poor’s 500 index fell almost 50%. I’m not making a prediction that stocks will implode like that again. But if you’re going to put all your money in equities, you should be aware of the potential downside.

And in fact, your downside could be even steeper since you plan to concentrate on growth stocks, which are more volatile than value-oriented ones. That’s not to say that growth shares can’t deliver a very impressive long-term return if you hang in through the ups and downs. But value stocks are no slouches either. Indeed, quite a bit of academic research, particularly the work of the University of Chicago’s Eugene Fama and Dartmouth’s Kenneth French, makes a convincing case that value, not growth, delivers the best returns over long stretches.

But let’s not get into a value vs. growth debate. Suffice it to say that growth and value shares typically go through cycles with one dominating for a number of years and then the other taking the lead. By investing in both value and growth shares, your portfolio will be more stable.

As for foreign and emerging markets, I’m all for making them a part of the mix (which, by the way, many target-funds do, in moderation). But you don’t want to overdo it there either, especially with emerging market stocks, which alternate explosive gains (up 71% in 1999) with devastating setbacks (down 37% over the next three years).

The portfolio you envision might do very well over the long term. But it could also get whacked pretty hard along the way. And if it gets hit hard enough, you may very well be tempted to abandon your plan and sell at the worst possible time. Oh, I know many investors say they won’t. But trust me, when stock prices are in freefall and all the talking heads on TV are shouting about what a bloodbath the market is, even the most steely nerved investors eventually cave.

Which brings me to why I think you might be just the sort of person who should do a target-date fund. They give us a broadly diversified portfolio instead of the more unwieldy version, overweighted in some asset classes and underweighted in others, that some of us might put together on our own. A less diversified portfolio can hit the jackpot if everything goes right. But it can tank if things don’t. Generally, I think investors are better off diversifying than making concentrated bets.

Target funds also provide a disciplined strategy that unfolds on its own. I think that’s good because it makes us less apt to tinker constantly or, even worse, dramatically overhaul our portfolios in response to the markets ups and downs.

In short, target funds can protect us from ourselves and our tendency to make rash and self-defeating moves when investing.

Ultimately, you’ll have to decide whether to proceed with the portfolio you’ve outlined. But given the choice between what you’ve described and a target fund, I would go with the target fund.

But there is another way. You can invest on your own but build a less extreme portfolio. Maybe throw in a small dollop of bonds. And instead of limiting yourself to growth stocks, include some value shares. As for foreign stocks, people can disagree on what’s appropriate for U.S. investors. But I think 20% to 30% is a reasonable level, and I’d devote only a small portion of that stake to emerging market funds.

Will you be leaving money on the table by diversifying more? Very possibly. But you’ll also have a portfolio that will deliver solid but more consistent returns during your career and is less likely to blow up. Which is just what you want when it comes to the money you’ll be depending on for retirement.

From Bill Miller to Derek Jeter: 40 great minds share the best money lessons they ever learned.

Bill Miller
Manager, Legg Mason Value Trust

I was nine years old, and I saw my father reading the financial pages. They didn’t look like the sports pages or the comics, so I asked him what they were. He said, “Well, these are stocks.” I said, “What’s a stock?” And he said, “See this thing? This represents a company. And see this ‘plus .25′? That means that if you own one share of this company today, you have 25¢ more than you had yesterday.”

And I said, “I can have this thing yesterday, I can go to sleep, wake up and have 25¢ more and not do any work?” And he said, “Yes.” I had come in from mowing the grass for three hours to earn 25¢. So the lesson I took was that in the stock market you can make money without doing any work. And since I have always had an almost infinite capacity for indolence, I thought, “This is great.”

Of course, I realized only many years later that you could earn the market rate of return by doing no work, but to earn an excess rate of return certainly does require some work!