This past week at the class I was teaching, I had a student talk about a few great deals he got. One was a laptop, and the other was a GPS unit. I was going to tell him that you have to watch out for that sort of thing, but before I could say anything, he began to explain that one of his buddies has a bumper sticker that reads, “I’m going broke saving money.”
I’m glad he recognized that you can spend too much money on great deals, because it seems like many people get confused between saving money and getting a great deal. There certainly is a relationship between good deals and saving money, but those things are not the same.
There is a simple test to know if you’re saving money or just getting a good deal. The test is to ask yourself, “Was I going to buy this anyway?” If the answer is “no,” you got a good deal, but you didn’t save money. Instead you spent money you wouldn’t otherwise have spent.
Let’s explore a few examples:
You saved money.
You got a good deal, but you didn’t save money. The area rug is an impulse buy.
Assuming the price per roll was really at a discount compared to other stores, you saved money. You might not have been planning on buying toilet paper, but you would end up buying it over time anyway.
Now, there’s one thing to note about this last example which is buying a minivan sized bag of toilet paper may save you money, but it might not be good for your monthly cash flow. Don’t save money on a truck load of something if it means you can’t afford your light bill that month.
To sum up, any great deals you find or coupons you redeem don’t save you money unless you were going to buy that item anyway.