Buying Good Deals: My two cents

Have you ever witnessed an amazing deal online, or in the store and immediately jumped on it to save a lot of money? You might think you saved a lot of money on that seemingly rare and once in a lifetime opportunity – but chances are, you actually lost money.

Let Me Explain…

As humans, we are emotional beings and often make impulse decisions. Even as a responsible, financially literate person, you may believe you are making the right move and saving tons of money by purchasing that new Elite-book with an i7 processor, $500 off retail price – or making a killing by cashing in on that Buy-One Get-One (BOGO) pizza deal.

This, however, is usually an illusion. It is an illusion because your impulse emotions get the best of you, and you fail to isolate your needs from your wants. These so called deals only save you money if they are needs – that is, if you were planning on purchasing the same product and quantity ANYWAY. If not, then you are forcing an unwarranted event and purchasing something you otherwise wouldn’t be – just because it makes you feel that you’re getting a good deal.

For example, back to our BOGO pizza deal. You’re hungry and want to purchase a large pie of cheese pizza from your local Mom & Pop Italian restaurant. A large pie here typically costs $10. But, you notice it’s Wednesday and on Wednesdays, there’s a buy 2, get 1 free deal. This would mean you can purchase 2 large pies, for $20 and get a 3rd pie for free, effectively costing around $6.66 per pie. What a killer deal! Right?

Not exactly

Though the economies of scale look attractive, the economies of…needs…is not! You were hungry, and spending $10 would have satisfied the need. But now, you’ve spent $20, which is double what you actually needed to spend. Yes, you have 2 extra pies now; but those were not needs. In fact, they’re left overs now and you’ll find yourself forcing yourself to eat them later on, or giving them away unless you leave them to spoil. The bottom line here is, you spent twice as much as you needed to and thus, you didn’t save money – rather, you SPENT money.

The same principal applies to any other impulse buys. Next time you see a new laptop or the latest sneakers on sale, please try to really ask yourself – were you going to purchase it ANYWAY in the very near future? If not, you’re becoming victim to the big marketing ploy that is slowing down your pace to financial freedom by tricking you into buying wants. Just my two cents.