I have noticed a trend in our family’s spending recently that I would like to share with you today. Many of us have a membership to a big box wholesale store because the things we buy there in bulk are often many times cheaper than buying the same thing at a chain or mom and pop grocery store. But, does buying in bulk really save money?
Let’s look at a few ideas:
- At a box store you usually pay an annual fee to be allowed the privilege to shop there. And if you sign up for their credit card it makes spending there easier.
- It is more expensive to impulse shop at a box store than a grocery store, because the items are larger or you have to buy two to get the deal.
- Have you ever noticed how long some of these things remain, unused, on your shelf or in the freezer? Do you still have that bag of meatballs in the freezer from last Christmas?
- What is the opportunity cost that is lost by buying in bulk? Where else could that money have been spent? If you have things sitting on your shelf for months, you are tying up resources that might have been better used someplace else.
In this culture of big box everything how do we navigate to be the wisest spenders? Here are a few tips:
- Pay cash, it hurts more and will help you to stay on budget.
- Shop around and find out which store has the lowest yearly basic membership. Don’t fall into the upgrade trap!
- Analyze your spending habits. How long do you have all those paper towels or cans of tomatoes? Would buying these items in smaller quantities reduce your monthly food budget?
- Shop with a list and buy only what is on the list! Don’t go shopping when you are hungry.
Thinking about the opportunity cost of storing bulk items is an important part of budgeting and getting the most out of your resources. Just because an item is less expensive does not necessarily mean that you need to buy 24 and store them for a year. Be thoughtful, be deliberate and get pointed in the right direction towards improving your spending habits.
What do you think? Please share how you navigate these stores with a budget.
Tim and Kathryn Gerken are Financial Coaches in Newcastle, WA, where they serve their community in the greater Seattle area.
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