Do you pride yourself on being a bargain hunter? Always looking for the best way to save money on products and as soon as you see a really good deal you buy up as much as possible?
I have seen people buy things they don’t need or even want just to get a good deal.
I hear “saving money” frequently as a reason people waste money on stuff:
Sure I spent $100 on a video game bundle last week, but it usually would have been $250 so I just had to buy it.
Can you believe I saved $200 at Kohl’s yesterday?
These shoes only cost me $70 when normally they would’ve cost $150.
I only spent $100 on this pair of sunglasses, I saved $100!
I bought another dress yesterday, I saved like 50% on it.
Now I’m not going to sit here and tell you that getting a good deal is inherently wrong. But I am going to tell you that your mindset about saving money on goods is completely off.
When you buy something there are only two things happening. You are giving the seller dollars, and the seller is giving you the product. It is a trade between dollars and a product.
There is no external force called “savings” that happens at the point of trade. Even if you buy the best pair of pants ever for $1, the only thing that occurred is you traded $1 for a pair of pants. You can brag about how good of a deal that is, and you’d be right to do it, but now you have $1 less and 1 pair of pants more.
Now if you have a system for selling that pair of pants for a profit, you can talk about the Return on Investment of purchasing that pair of pants. But unless you really needed another pair of pants you are $1 poorer and your life hasn’t improved at all.
When you buy that 100th pair of shoes to pile in your closet because the savings were too good to pass, note that you’re probably somewhere between $1,000-$10,000 down on money and have a cluttered closet for good measure. Nothing about owning those shoes increases your financial situation. The money is out of your bank account, gone forever.
What is Saving Money
Saving money is a very real concept. It’s where you forgo spending to put money away for later. It’s where you partition a part of your paycheck to put away somewhere where you can’t spend it.
Whether you let your checking account build up, put the money in savings, invest it in some liquid investment or something like that, it is called saving money. You can save money to build up an emergency fund, to start getting some good investment returns, to get a down payment on a house, to buy a car, to go on a memorable trip, to make a big donation, or really to do whatever you want. Anything where you put money aside is saving.
When you trade money for a product, no matter how good a deal, you do not save money. You spent money and that’s it. You may have gotten the best product ever, but unless you can put that product under your mattress and can then trade it for a down payment later, it isn’t called saving money.
Buy Things You Planned for Value
Let’s say you know your family needs to buy food, clearly. How do you get the best value out of your purchase?
Bargain hunting may not be the best method. This is a strange concept to most, because they would go look at the coupon book or deals of the week to see where the biggest savings are. But the truth is, often times that’s just a marketing gimmick. Take it from someone who majored in marketing in college. You can price your product at a premium high price to make it look good, even if it is the same exact product as a cheaper brand. Then you issue a “deal” and people go nuts over it.
Really you should be hunting for value. I need tacos, so where can I get tacos that are up to my standard for the cheapest price. It may be that I need a 50% off coupon to get the cheapest price. If that’s the case, great. But if the premium taco is $5 per taco, and they have a 50% of deal to make it $2.50, I will only use that deal if the comparable tacos cost less than $2.50. In many cases, you’ll find a perfectly good brand that is always priced at $2 with no deals to be seen anywhere. Yet somehow the 50% off deal makes people spend more money.
I’m not going to buy an overpriced taco just because I have a coupon for it when there is another brand that fits my needs for cheaper!