Are you really saving money by shopping bargain sales? Sometimes yes, sometimes no. Purchasing on clearance or during a close out sale can save you money. Where it goes wrong is quantity over quality. When items are perceived as a “bargain” you end up purchasing more than you would have. Impulse shopping takes you through an unnecessary feeling of “since this is so inexpensive, should I buy more”?
Take a hard look at your closet and take stock of what you purchased simply because they were on sale. We use signals as indicators of whether something is a good deal. Manufacturer’s suggested retail price is one. Reference prices (the ones that compare a blouse at $90 with another at $200) are another. “People take for granted that the reference price is accurate,” explains William Poundstone, author of Priceless: The Myth of Fair Value (and How to Take Advantage of It). And the perceived value increases as the reference price goes up. “Emotionally, you’re still drawn to something that seems like a bargain. You can’t unring that bell.” Buying on sale is also alluring because it’s like buying a little shot of self-esteem.
Credit cards can exacerbate impulse spending, and with interest rates what they are, you could end up spending way more than that sales tag price. Numerous studies have shown that when people pay in cash rather than using a credit card, they tend to spend less, in part because psychologically it’s harder for us to part with cold hard cash. A Bankrate.com study showed that people who use charge cards at fast-food restaurants spend on average 50 percent more than people who pay with cash. That’s bad for not only your wallet but also your waistline, too.
Going through what you already own, and reselling or donating pieces you no longer value, can not only simplify shopping but also help you to understand what you love and what you buy “just because”.
During our retirement years, spending money in ways that provide value, as well as rich experiences can feel more satisfying than material goods. Try adding a little extra coin to that vacation savings fund every time you’re tempted by a sale flyer. That trip to Spain may be closer then you think!