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Spending Money to Save Money

Do you really save when you spend?

If there were a top 10 list of the world’s worst concepts, this would rank near the top. I’ll assume that everyone who reads this understands the most basic of mathematics.

Marketers have long used this phrase to great success and still continue to. Earlier today I heard the claim made in some theme park commericals, to which the person who said it receieved ample applause.

Marketers love this idea because it is a half-truth that is easily twisted. Let’s discuss the truth side of this claim.

How do you save money?

If you don’t spend money, you’re saving it. This is the most basic concept. If you have $100 dollars and you spend $96, then you’ve saved $4, or 4%.

Next, if you are going to purchase something and you find a coupon for it, then you will save money. That’s pretty simple, right? If you have money that is earmarked to be spent, and you spend less than anticipated, than you saved money.

Using our previous example, if you are going to spend $96, but you use a coupon for $1 off, then you’ve saved $5, or 5%. That’s a 1% increase in your savings, great job! Keep this up.

How is this idea twisted?

Using our previous example, let’s say that you purchase your $96 item, but there is an offer to purchase an additional $100 item at a steep discount for only $75. Now you’ve saved $4 + $25 on that other item! WRONG! The meaning was twisted. Looking at your net, you spent $75 more than you intended to.

How is that saving? Some might argue that if you have a genuine use for the item in the future, then you did save. To that I say, if you needed the item, then it would have been on your list. The only area where I can accept this arugment is if you’re getting the same or similar item for future use and it has a long shelf-life.

People who walk into a retail store will often fall for this and purchase a bunch of junk that they didn’t need. Then they claim a savings.

The Theme Park Example

Going back to the theme park commercial I was talking about: a family is discussing which theme park to go to, then the mother says “let’s go to both, we can save money if I buy them both right now.”

Really? How can you save money? If you were originally planning on purchasing only one, and you’re going to spend more money, that doesn’t sound like a savings silly!

Coupons do this to people

I don’t care how many $1 coupons you use, if you weren’t going to purchase that item, then you’ve spent money, not saved. Often, people purchase items and never use them, or get minimal utility out of them, how can that be considered saving?

Many coupons exist for the sole purpose of getting you to try a product, nothing is wrong with that, but if you’re purchasing things you wouldn’t ordinarily have, then that coupon is doing nothing for you except diverting your cash from your wallet  to elsewhere.

Image: renjith krishnan / FreeDigitalPhotos.net

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