How many times have you bought something just because it was on sale? Somehow, the extra discount and the coupon in your wallet—along with the already discounted price—made it seem like NOT investing your money in the new sweater, jacket, shoes, or electronic device would be a dumb move. You reason that eventually, you will really need it anyway, so why not buy it right now, especially when the price is so low? Plus, as a bargaining chip, you can tell your spouse that the sale was so fantastic that, in actuality, you were SAVING money. But were you really?
This line of thinking has its pros and cons. For one thing, you would have saved a lot of money had you just decided NOT to buy it, despite all the marketing enticements (that obviously worked). Spending no money and buying something at a good price are definitely two different approaches to money management. While it may be a good idea to purchase regular items you use every day, like toilet paper or shampoo, in bulk at greatly reduced prices, buying commodities like a car, a new television, or a new pair of shoes will quickly drain your resources. In fact, this likely means that you are one of the millions of consumers who impulse buy based on marketing ploys.
The Psychology Behind Sales and Discounts
Do you think all of those magazines and candy bars in the checkout aisle are really there because the stores have nowhere else to put them? The truth is that marketers in every industry often use tactics like special sales, discounts, coupons, money-back certificates, rebates, and credit card offers as a way to increase revenue. Marketers rely on the fact that if something is a good enough deal, you won’t be able to resist the purchase. However, the truth is that if certain prices are being offered, chances are you will be able to find the same items at the same price when you actually need them—or even cheaper!
Additionally, internet shopping has forced businesses to compete. If you can look up any item in the world, find the best price, and have it shipped for free, then why would you want to buy from a brick-and-mortar store? Auction warehouses have provided consumers with the best deals, making it difficult for small businesses to compete on price. In turn, stores have resorted to offering bundles, feature-packed deals, and sign-ups for credit cards that convert into instant discounts. Yet, if you don’t pay off the purchase right away, you could end up paying double or triple the non-sale price for the item.
In order to capitalize on the benefits of shopping sales, you must commit to never paying full price for anything. Combining coupons and special offers to get the most for your money might cause you to spend more than planned—especially on big-ticket items—but you could save thousands in the long run. The key is balancing your needs versus wants and not depleting your resources to get the best deal. The bottom line is that no matter how discounted a DVD player, computer, or lot of groceries are, you AREN’T getting them for nothing.
It’s normal for all of us to rationalize our spending. Think about Black Friday sales, where millions of consumers fight crowds just to be one of the lucky 15 people to get a computer or vacuum cleaner for practically nothing. Then look at your Sunday circular, packed full of sale items with limited quantities available. You get to the store, and a sales clerk convinces you to find something bigger, better, and even more reduced than your original item. The sale seems too good to pass up, so you purchase. Financial experts have a solution for this.
Before you buy anything, give yourself time to think. In other words, remember that if an item is on sale right now, chances are it will be on sale at another provider later. The “giving it away” price is likely not a once-in-a-lifetime deal. Most stores also offer rain checks and price matching to remain competitive. But instead of purchasing immediately, allow yourself three days to think about it. Obviously, if you are purchasing groceries or everyday items, you shouldn’t employ this waiting process. But for all other items, you must. By the time three days have passed, the excitement sparked by marketing will likely have faded, and you’ll have had time to talk to your spouse about the purchase and do some research. Chances are, you might even find a better price or realize that you don’t really need the item. What you save by waiting could be hundreds—or even thousands—of dollars. Do this for every item you purchase, and you’ll become a smart consumer.
Another strategic move for couples is to agree on a dollar amount for any one item that must be a collaborative purchase. For example, you could decide that neither of you will spend $50 on any one item, whether it’s a coat, a pair of shoes, or a camera, without consulting the other. This gives both of you bargaining power and ensures you’re in agreement on what constitutes a ‘great price’ before making a purchase. It also helps you walk away from the super-buy momentarily. If the price is truly great and it’s something you both need, then the two of you can return to the store and make the purchase together.
There are more important factors to consider when making a purchase than just the price. While it’s easy to rationalize a purchase just because the price was right, it isn’t always the best way to manage your money. To protect yourself from marketing ploys, use your consumer power wisely. Remember, without YOUR purchases, businesses wouldn’t be able to stay afloat.
