This post could be summarised in a single three word sentence: Spend. Less. OVERALL.*
“Any 2 for $7!” In Australia, we see these stickers all over supermarkets advertising discounts on items (normally food) if only we would stump up and buy more than one. It’s an interesting phrase, one that I’ve become more and more curious about over the past few months. Looking a the $4.83 bread in my local supermarket, I’m offered the opportunity to save money by buying a second loaf for only another $2.17. Actually, I won’t just be saving money, I’ll be SAVING MONEY. My frugal and thrifty self goes wild in anticipation as it does the math, I’ll average $3.50 per loaf if I buy the second loaf at about 45% off that seems like a good buy. It’s Cheaper to Buy Two**. Never mind that I don’t eat that much bread or that I don’t have freezer space to store the second one until I’ve eaten the first. Bread isn’t the only thing you can buy 2, or 3 of and save; biscuits, cheeses, meats, a variety of fruit and vegetables are all offered up with similar discounts by ‘generous supermarkets’.
There’s this tug at something deeper within me too, as I tell myself I can eat 2 loaves of bread bread or 5 avocados, etc before they spoil. It’s not just my frugal self to whom this phrase reaches out, it’s also my responsible self. Buying this, I’m saving money right? And that’s very noble. Setting myself up for long-term financial success. Saving has been exhorted to me since I was 4 or 5 years old – and saving is good! It’s the cornerstone to building wealth and becoming financially free.
But think about it for a minute, what is the store is actually asking you to do?
Save? Or are they actually asking you to SPEND! – Not save! They’re requesting you give them a little more of your hard earned cash (an extra $2.17 for the second loaf). And once gone, it’s gone! Don’t get me wrong, if you have a large family, or are particularly fond of store bought breads, then such offers might be a good deal and help you spend less overall. But if like me, you aren’t going to eat that 2nd loaf of bread then you’re actually throwing away $2.17. More often than not, I’ve never consumed the additional items I’ve bought at these discounts and instead felt a twang of guilt as I sheepishly place their rotting and mouldy caucuses into the compost.
If we were actually saving money we’d be placing that amount in a term deposit or our investment portfolio, not walking home with an extra loaf of bread and a lighter bank account.
Buy-more-and-save is not the only method stores use to ask you to spend more money, similar offers, include the humble “10% off” or “buy This Product and save 50% on This Other Product”. These slogans flip a switch in our brain, which leads to the impulse buy of something you probably didn’t need, “but the price is so cheap and I’ll be saving money” I’ve heard myself say as I feel all clever and justified making my purchase.
It’s a subtle yet powerful use of language, and it’s used so that we spend more, not less.
If we were actually saving money we’d be placing that amount in a term deposit or our investment portfolio, not walking home with an extra loaf of bread and a lighter bank account. The result is that we confuse the two phrases yet spending more but less per unit ≠ saving money!
What makes this more difficult is that a ton of well meaning websites and magazines offer similar advice as a way to save money. Buying in bulk, freezing x-y-z products for months on end and diving into the freezer when you need these items (if you still remember you have them) can work, but you need to be quite organised and have the requisite storage facilities! This method is great those conditions apply to you, but like many people, it simply doesn’t make sense for me on the majority of my purchases, particularly with food-items.
Now that I’m aware of this subtle marketing trick, it has largely lost it’s power. Unless I know for sure I’ll use the items then I simply pass the offer up and buy one item at full price. Sure my per-unit price is higher, but per unit consumed I’ve actually spent less; for example, if you throw out the second loaf of bread you’ve effectively paid $7 (rather than $4.83) for one! It’s still a good idea to take advantage of offers when they fully make sense, but don’t kid yourself that you’re saving money. You’re spending more, whilst spending less per unit bought. And that’s fine. But call a fish a fish.
This kind of discounting is most advantageous for you when it’s for goods that don’t perish easily (think deodorant, tissues, or other non-perishables you are certain to use). So to be clear, you can play it in your favour if you’re choosey – although I find it simpler to only buy one and keep the money for the extras in my own domain, rather than hand it over to the supermarket.
Next time you’re at the supermarket, think your discount purchases through with care and decide whether you’re better off buying one at full price and making full use of it, or buying that second or third to pay less per unit – which works only if you actually use (eat) the bugger! Take it a step further and actually go home and set-up a regular deposit into a savings account and then you can pat yourself on the back, you actually are SAVING MONEY! 🙂
*I somehow managed to turn it into 3 one word sentences but never mind.
**Hopefully by now you’ve spotted it’s actually not ‘cheaper to buy two’ – it’s just cheaper-per-unit to buy 2! You’re still spending more and saving less.