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The Discount Myth

With Black Friday just around the corner, the “savings” pumped out by our culture are all but unavoidable.  Everywhere we go we’re being offered a sale on something, whether it’s the necessities of our lives such as food or the less necessary, such as an extra pair of shoes or, yes, even scores of holiday gifts (many of which will sadly end up never worn, used or perhaps worse, returned or regifted).

It’s easy to get caught up in these sales, look at the original price of the products we’re buying and look at the sale price and think “Hey, if I buy this now while it’s on sale, I won’t be spending that extra money when I need to purchase it later.”  In many cases, we begin to tell ourselves (as it’s something we’re told time and time again by advertisers) that we’re saving money by making these purchases.

There are some cases where this actually is a means of saving money.  We’ve all heard stories about the coupon queens and kings, who manage to cut their shopping prices down by such a drastic amount that it’s almost unbelievable but more often than not we’re buying on an impulse.  It’s a pervasive, hard to change mindset, but it’s important to take a closer look at just what these “savings” are netting us, and most importantly, to address the language that’s being used to get us hooked.

“Saving” is a misnomer — nothing, ultimately, is being saved by spending money.  If you buy an item on sale, you’re still buying that item, you’re still spending the money to purchase it — the only actual saving taking place would be refusing to buy it at all.  Rather, it’s important to convince yourself that sales aren’t means of “saving” money, they’re a means of spending slightly less money where you would otherwise be spending more.  While spending money on sale items will help cut back on your spending habits, it’s still spending, regardless of how little you’re paying for the objects in question.

Not only is this important in our personal lives, it’s an important distinction to make for our investments.   While with investing we’re expecting a return, it’s still always a good question to ask yourself, “if I’m buying something at a lower price, will it still bring a return?  Am I still gaining money by spending money?”  As much as something like a fixer-upper house or cheap stock with a good history will seem like a steal, it’s still money being spent, and it will still require a lot of follow-through to make it anything else. 

So this holiday season let’s think before we spend to “save”.

 

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