I was thinking about Black Friday and how hundreds of people camp out overnight to get massive discounts, such as 60-inch flat screen LCD TVs for $150, 70% of laptops, and buy 1 get 1 free digital cameras. Most people go through the hassle of waiting in line and waking up before dawn, so they can save money. But, do they really save?
My questions to you are: When you buy things on sale, does that mean you’re actually saving money? Do sales really help you keep more cash in your bank account?
What do you think?
Think about it . . .
A little bit more . . .
Got a final answer?
Alright, time’s up .
My answer: Often discounts and sales actually hurt your bank account! Let me explain with a personal example.
A few years ago, I went into Banana Republic to buy a winter jacket during the after Christmas sale. I planned to buy one item—a jacket for about $125. The sales were better than expected! The jacket was marked down from $300 to $32! (You already know what happened next, don’t ya?) I bought more stuff, for a total of 1 jacket, 3 pairs of pants, and 3 tops. The total cost was over $200. I walked out smiling about much money I saved.
But did I actually save money? Here’s the math:
| Planned | Actual | Difference | |
| # of Items | 1 | 7 | Bought 6 impulse buys |
| Average Price per Item | $125 | $32 | Average price per item was about $95 less than expected, due to great discounts |
| Total Price | $125 | $225 | Spent $100 more than planned, a full Benjamin gone from my bank account |
I walked out happy and smiling because I bought 7 items on sale–1 that I needed and 6 that I bought on impulse. I wasn’t thinking about the bottom line: My bank account was $225 poorer. Did I actually save money? Was this actually a net plus to my life or finances? No to both!
I can’t tell you how many times I went shopping with the mentality that if I got discounts per item, I saved overall. It took a while, but it finally sunk in–I save money only when my total shopping bill is less than planned or the extra items are things I needed. (Ladies, I mean need like food, water, shelter, etc. Not the way you “need” another pair of black pumps or a new LBD.)
By buying extra items I didn’t need, I wasted money. I could have bought just the jacket, and had about $195 to spend on something I really valued. (Like 3 -4 nights at a hotel in Greece!) Store owners are smart. They get us in the door with sales, hoping that we’ll buy more overall. 😉
Proving the point that impulse buys often waste money, I rarely wore the 6 impulse buys and no longer even have them. The jacket, which I needed, has lasted 4+ years, is still worn regularly, and is hanging in my coat closet right now.
Now it’s your turn: When you get discounts, does it feel like you saved money? Even if you spent more overall?
Financially Fab 