Are You REALLY Saving? 3 Ways You Could Be Overspending

by Miranda Marquit · 12 comments

overspending money

When we see a great deal, we are inclined to think that we are “saving money.” Some store receipts even help with this illusion by giving you a total of your “savings” at the bottom, so you can see what a savvy shopper you are.

However, in many cases, you might just be overspending when you think you are getting a good deal. Here are 3 ways you could be spending more than you should — even while thinking that great “deal” is “saving” you money:

overspending money1. Buying Bulk Items

At first glance, buying in bulk seems like an obvious way to save money. The per-unit cost is often (but not always, so watch out!) lower than the single item price. However, that doesn’t mean that you are actually saving money. My husband is about done with a Ph.D. in experimental psychology, and he tells me that there is an interesting study showing that if you have more, then you consume more, and that packaging makes a difference. The bigger the container, the more you consume.

Buying in bulk has much of the same implication. If you have a large amount of food that you bought in bulk, you are likely to adjust your consumption habits by eating more. The same is true of buying toilet paper or paper towels in bulk. The large amounts of these items can, in some cases, encourage you to use more, since you feel that it is “safe” to use these items liberally.

While you can sometimes save money by buying in bulk, it is important to make sure that you don’t increase your consumption as well.  One way you can do this is to repackage bulk items when you get home, so that they are in smaller containers, encouraging slower consumption. Another area of concern is purchasing items that won’t go bad before you have a chance to use them.

2. Clearance and Sale Items

Sometimes we see that something is on sale. And we feel we need to get it, right now, or miss out. It might not be something that we need — or even want. However, if you are getting something just because it’s on sale, and you’re afraid it won’t be later, you are setting yourself up to overspend. Even if you buy something on clearance, you are spending money. If it’s money you weren’t planning on spending anyway, you aren’t actually saving anything, no matter how good the deal is.

Instead, evaluate the purchase. Is it something you actually plan on getting in the next few weeks? If so, it might be worth it to get the item while it is on sale. But if it’s something that you vaguely think “might be useful to have around”, you might end up spending when you should be staying your hand. The same goes for clearance. I bought a pair of jeans because they were $5. I didn’t like the fit, but bought them anyway because they were just $5. Those jeans are never worn, and I just wasted five perfectly good dollars that could have been spent on something I’d actually use. This is far from saving money.

3. Using a Credit Card

You’ve probably seen posts and articles based on a 2008 study from the Journal of Experimental Psychology showing that those who use plastic are more likely to spend more money than those that use cash. The thinking is that when you swipe your credit card, you aren’t watching the money disappear. You can’t physically see the money leaving your hand. Instead, you are able to look more at what you are purchasing, since using plastic is more abstract. You focus on what you are getting, and don’t worry so much about the cost. Once you stop thinking about the cost, it is easier to overspend. Couple that with the interests associated with carrying a balance when you realize that you have spent more than you can afford, and the problem magnifies itself.

You can help reduce the chance that you will overspend with plastic by keeping track when you get home. Get a receipt, and enter the amount in your personal finance software or a ledger at home. Holding yourself accountable can help you reduce the chances that you will overspend.

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{ read the comments below or add one }

  • MyMove says:

    I really like your #1. I didn’t know that I use more as a result of having more. However, now that I think of it, bulk-buying does a horrible thing to me that’s a bit different from what you describe. I’m a minimalist that loves to be prepared for the future. That means that I love anticipating things that I will need in the future, months in advance, and buy them. However, the minimalist side of me kicks in and hates having all the extra items just taking over the space in my room so I end up using more of each item each time. Ugh, a habit I need to ditch fast. In the meantime, lately, I’ve been focusing on buying less, but at the same time, finding deals. The key to this is to not become a couponing maniac who fills her garage with three year’s supply of diapers and paper towels, but sticking to only what you NEED in the present.

  • Witty Artist says:

    All these 3 points are excellent. I guess the most dangerous one is when using a credit card. When paying cash it kind of makes me aware of how much I can spend and know when to stop. But I guess with a little exercise, it could e the same with the credit card also – it’s just a psychological illusion. As to buying on sales, it’s good to do it when you really need to – then it’s clearly saving money.

  • bert says:

    i’ve seen a lot on this site about the wastefulness of buying in bulk and the dangers of excessive eating. maybe the problem is the person’s buying habits, not the store itself. the costco near me has really good apples and mangoes… so what’s wrong with eating more of that? they also have good organic peanut butter (no hydrogenated oils), so i eat a lot of apple slices with peanut butter. sometimes 2 apples a day, plus a mango. also i made mango juice. i’ve also gotten great blackberries there for a really great price. since i knew i could rely on the quality of costco’s produce, i ended up buying it regularly and never wasting it because it is so good. so basically it helped me eat healthier. when i’d go to the regular grocery store, i noticed the quality of the produce was very inconsistent, so i stopped buying it and therefore was consuming less fresh produce.
    so if you’re buying soda in bulk, yeah, not such a good idea. cookies and chips? not such a good idea either.
    isn’t most of this stuff common sense?

    • Sally says:

      Common sense- the least common of the senses. Just be mindful of how much you are spending, on what, and why. Impulse buying will kill your carefully-crafted budget every time.

  • Neil says:

    All good points. I think that o ne should avoid sales items unless you have decided before you visit the store that you need something and it happens to be in the store. Otherwise it is easy to convince yourself that you “need” that thing in the sale.

  • Sally says:

    Don’t forget about coupons. Of course some people do really well with them. But you do have to be careful. You have to compare the final price to an alternative strategy. For example is using a coupon on cold cereal, how does the reduced cost compare to the store brand, or how does it compare to other breakfast alternatives.
    It is not how much you “save” but rather how much you spend. Also, many coupons are for processed foods. A good deal on low quality food is not a good deal.

  • The Best Money Blog says:

    We used to only buy things like toilet paper in bulk. The savings was there, but the membership costs and driving distance associated with driving to Costco basically came out even so we decided it was not worth it, at least for now.

  • Cd Phi says:

    Oh boy, the clearance and sale items…This is what’s going through my mind: “Oooohh look at this cute shirt. It’s on sale, too.” whereas if I would’ve just walked away I wouldn’t be spending a single dollar.

  • Azam Zaki says:

    My biggest enemy is credit card , I dont have the capability to keep a credit card without spending .

  • says:

    Point 1 is interesting. I always felt like buying in bulk is dangerous because you might not use all you buy. However, I never thought about consuming more just because it was there. While I buy very few things in bulk, I will certainly keep an eye on this next time I do.

  • CreditShout says:

    These are really excellent points. I especially agree with your third point. I always feel less guilty about buying with my credit card because I DON”T see the cash leaving my pocket, I definitely see it at the end of the month when I receive my bank statement. I also try to avoid buying perishable items in bulk. I try to stick to things that I know I will have to use, like paper products. I also love a good sale, but I still make sure I will use or wear the item I’m buying, no matter how much it costs.

  • David seo consultant says:

    So true. A couple days ago I was picking up canned mandarins and I almost picked the larger plastic jar (almost twice at big as the smaller can). Then I looked at the price: $2.79 compared to $0.77. I bought 12 cans instead of 6 jars. I saved over $6 and got a little extra. Over the course of a year, that would be about $120 savings. If only I could do that for everything we buy.

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