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Discounts: Spending rather than Saving?

Forever ago, I posted a picture on twitter that stated the following: "If something costs $1000 and it is now on sale for £750, and then you decide to buy it, you did not save $250. You spent $750."

Now if that isn't a life lesson, I don't know what is.

We tend to focus on discounts and any type of price indication that signals we are getting a good deal. That's why the price ending .99 is so popular. It just undercuts the next whole number, and is somehow perceived as less, whilst for ease of memory we do round up to recall how much we spend. Very strange. But super effective. I have written an article on the prominence of price endings if this interests you.

Anyway, to get back into discounts in themselves. Raise your hand if you once bought something just because it was on sale, not because you needed it. Stand up if this has happened more than once. Now that you're standing, grab your wallet if you can't remember what the last item you purchased on sale was. And just throw out all your credit cards if you can't even remember what the reason was you went into the store in the first place, (you just went for the sale, didn't you?). I'll save you some money this way...

Now buying things with discounts isn't bad in itself. I always buy one brand of toothpaste, I'm just lethargic like that. When this brand is finally on sale and has a discount of say, 50%, I tend to suddenly buy bulk. As long as I don't open all the tubes at once (and why would I?!), they keep and I have just gotten 4 tubes of toothpaste for the price of 2. Knowing that I will need and use all 4 tubes eventually, this is a good investment in the longer term. I have saved myself the money from having to buy 4 tubes at full price. I have spent the money of only 2. This article is definitely not trying to bash people who make purchases like this.*

But what about the other times? What about not needing anything but going into a store that has a sale on? And ending up buying three tops, one pair of jeans and some boots, because they were all half price? What about being in the grocery store and buying more chocolates than you set out to buy, because of the 2 + 2 discount? Are you truly getting more "bang for your buck," or did you end up spending more money than you would have initially, now owning more things than you wanted anyway? If you buy more than you wanted/needed, and those products don't keep or store well, you can give them away. More likely, you will throw them away. So not only did you not really save money, you are also wasteful. So what part of this form of discount-buying is beneficial?

Keep in mind, discounts are a marketing trick. They are there for stores to get rid of the product they are discounting. This can be because a product is going to expire (soon), because it is faulty, because the new collections are in, but often it's just to ramp-up sales, quickly. How often have you not seen things on 9gag or reddit, where the sale was not so much a sale, but rather the store maintaining the exact same price for all products, but marketing them as being discounted. "Now only £10!" gets you a lot more customers than "It's still £10, like it always was..."

Now except for owning more stuff than you need, let's get back to the monetary side of it all. It's all about saving. Watch one of these American bargain-hunter shows and you know what I'm on about. "If I buy this deal, combined with these coupons, and this code... I have just saved myself $150!" Yes, but you also spend money, and that is often neglected. Or it is mentioned, but with the tagline: "This much product for so little money!" Which is solid, if you were going to buy these products anyway. If not, it's still a waste of money.*

We are currently not in a economy that allows for impulse inhibition. No, a decade after the recession that showed us how unstable the economy is and we are still being screamed at from all angles to buy, buy, buy! If we initially didn't want to buy anything, why should a sale or a discount change that?

Somehow, we feel that we are getting a great deal. We are "beating the system." Getting so much product, for a relatively low monetary value can feel great. But buying things we don't need, or didn't even initially want can lead to real adverse consequences. Bargain hunting can turn in obsessive behaviours that can ruin your life, or at least your credit score. Because when buying a product, any product, even if there is a discount on it, that money you "saved" isn't going to be added to your bank account all of a sudden. The money you spend on the product, although less with the discount, will be deducted from your bank balance. So, I'll ask again: do you need it? But maybe even more importantly: Did you even want it before it was on sale?

note: I would like to emphasize that I'm not against buying exclusively discounted products or using coupons to financially run and maintain a household. I am mainly warning against overconsumption due to discounts.


Behavioural Science

Personal Finance



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