Pennies may be obsolete, but the phrase “penny wise and pound foolish” from our grandmothers’ generation still reminds us that cheap is not always economical. We scrimp and save every penny, but then we buy mindlessly, with little thought of whether what we’re buying is actually cost-effective. Think about it – does this apply to you, today?
Let’s look at some practical tips on how not to fall into this trap.
1) The dollar store or discount shop isn’t always the best place to buy things. Do price checks of similar, higher quality items at other places. The cheap stuff could fall apart, or the cleaning fluids may be missing the crucial active ingredient.
2) What is your time worth? Don’t forget unseen things like time management, organisation, and efficiency in estimating cost. More expensive items may give you extra time to accomplish other things. Is the little money you’d save on a less efficient product worth the extra time and energy you’ll expend? A good example is the simple human steel trash can. You can buy a trash can at the discount hole for $10, but is it going to make your life easier? Probably not. A simple human trash can may cost more, but it makes up for it by making your life flow more smoothly and efficiently. It really feels so much better to step on a can and open it smoothly when your hands are full. The peace of mind will translate into dollars, somewhere. There are more important things than money.
3) Recognize the difference between price and value. Something can have far greater value than its price. Even if the item is more expensive, it may be much more valuable than the cheap product. It may even increase in value where a cheap product won’t. A valuable item may fulfill many purposes when the cheap product may serve one.
4) How long will the cheap item last? Cheap items can break in a day, when a more expensive item might have lasted a year. If you spent $10 on the cheap item and it breaks the next day, was it actually cheaper when you could have purchased the $20 item that might have lasted for a year or more? In fact, you may need to spend a lot more on two cheap items when one more expensive item would have served the same purpose.
5) What about the other costs of replacing the item? How much gas will you have to burn, how much time will you spend in your car, how much will you suffer weaving your way through the plastic jungle at your local discount store to buy another item?
There really is a hidden cost to everything we buy, and it really is one more thing to think about. We have to pay close attention to the value of an object based on these five principles, and not merely its price tag.