My least favorite part of shopping is going to the cash register. I hate the sinking feeling in my gut that I get when my items are totaled and tax is applied.
Did I really spend that much? Yes, the numbers don’t lie.
As I’m shopping, I have a rough idea of what I’m spending, but somehow it always becomes much more when it’s accurately totaled. This is partially the fault of my falling for retail pricing tactics.
For instance, an item’s sale price is $19.98. When you estimate your total while shopping, it’s easy to drop off the change and think of it as $19, which is exactly what retailers want you to do! In actuality, $19.98 is much closer to $20 than $19.
By advertising a price as a penny or two less than the next dollar amount, retailers trick many shoppers into thinking they’re spending less.
This is a tactic I became familiar with at a young age, thanks to my penny-pinching parent. She would ask me how much an item was, and at first, I would answer something like “$19.98.” She would correct me, saying that the item was actually more like $20.
As an obsessive-compulsive person, I didn’t really like rounding up when I was actually spending less, but I soon discovered why she did this. When she got to the register, there were no surprises. She usually had her money ready to go before her items were totaled, and she hardly ever had to dig in her purse for more.
My grandmother had perfected the art of rounding.
Round ‘Em Up
Since hardly anything is priced in even dollar amounts (other than at the dollar store), it’s necessary to round dollar amounts to get a more accurate idea of what you’re spending before you get to the register.
Rounding isn’t just a technique you learned in school to help you determine answers given in decimal points; it’s a valuable skill for shopping smart. By rounding amounts to the nearest whole dollar, you can quickly determine if you’re staying within your budget.
For instance, if you purchase items that are priced $15.97, $5.88, and $2.47, you can round the first amount up to $16, the second amount to $6, and the third amount to $2.50. Your estimated cost is then $24.50. If you calculate the actual cost, it’s $24.32. That’s very close! Of course, if you have a calculator on your phone, you can always plug the actual amounts in to get this total. But if you don’t want to stop what you’re doing, rounding is an easy way to calculate an accurate total in your head.
Don’t Forget Tax
In case you were wondering, no, I didn’t forget about sales tax. This is something that should be rounded into your estimated total, as well. In my state, for instance, the sales tax is 6%. This is closest to 10%, which is an easier percentage to calculate in your head.
In the case of the previous purchase, I would determine 10% of $24.50, which is $2.45. If you wanted to round this again, it would be $2.50. So the total will be under $27. To test the math, 6% of the actual total, $24.32, is $1.46. The total with tax becomes $25.78. The estimate of $27 is very close, and as always, higher than what was actually spent.
Math Isn’t Always Evil
The practice of rounding dollar amounts to get a more accurate picture of what you’re spending can be applied in many areas of personal finance — beyond a simple trip the grocery store or the mall. By utilizing this oft-forgotten mathematical technique, you can avoid register shock and be more aware of your spending.
Do you round up numbers in your head while shopping? Why or why not?