Beware the Deal

Eric Jorgensen, CFP®
Contributor

Ever feel like the deck is just stacked against you when it comes to saving money? After all, no matter how hard you try, something always seems to come up - and usually just when you're starting to get ahead. No doubt sometimes this is true, after all, I think we've all had those "oh crap" moments and watched our emergency savings dwindle away to nothing. However, I think if we were an impartial viewer we may draw some different conclusions. Having an unforeseen crisis occur and wipe out the money you saved is not to be confused with not having an emergency fund established because of bad saving habits, compounded by life event which would not have been considered "traumatic" if you'd done a better job saving.

Now before you conclude this is yet another person telling you what you should/shouldn't spend your money on - that is not my intent. I've lived what I'm writing, and I want to share one of the techniques I used to help myself out of the hole. Today the focus is on buying wholesale and/or discount items. I used to shop at BJ's Wholesale Club, and I'm familiar with the idea of buying in bulk to save money. The same goes for using coupons and looking for items "on sale". In some cases, this can make a LOT of sense, and it really does save you money. But it should not be taken as a "rule"; because it's easy to let spending get out of control.

Let's address buying in bulk first. I'm all for buying bulk quantities of consumables like toilet paper, paper towels, etc; especially if you have a large family. But temper this with reality - how much will you use in the span of a month? Why a month? Because I've found tracking spending for a month gives you a fairly accurate idea of where your money is going, and it's not too difficult to prepare a spending plan for the entire year. When you consider buying food in bulk, make sure you're going to eat it. Sounds like a no-brainer, right? But how many of us have thrown food out, unopened, because it passed it's expiration date or spoiled? 

Coupons, sales, and discounts all have potential pitfalls as well. You're not really saving any money when you buy something with a coupon, or that's on sale, if you wouldn't have bought it if you didn't have the coupon or if it hadn't been on sale. But if you are shopping for something, like a TV or a computer, waiting for it to go on sale becomes a winning strategy. The same is true when grocery shopping - coupons are great, if they're for something you were already going to buy.

Lately, it's been online retailers who I'm concerned about - offering free or discounted shipping when a certain dollar value has been ordered. The shipping isn't really free, you've just paid for it in additional merchandise. 

These tips apply whether you're in debt or not, why give anybody more of your hard-earned money than you have to. If you're struggling to save, or wondering where to even begin, a review of what you spend your money on is a good start. Don't change anything right away, take the time to look at where your money goes and understand your triggers. A few examples are "discontinued", "two for the price of one", spend "x" and get "y". We're at a disadvantage, those who sell products or services often have entire departments whose sole purpose is to get us, the consumer, to buy more. But if we shop smart, understanding what you intend to purchase before walking into the store or hopping onto the website, we can strengthen our purchasing power.

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