When you start talking about personal finance, you can get into some arguments about where to buy things. Wal-mart, after all is hard for many stores to compete with on prices. At the same time, though, buying from Wal-mart doesn’t always help the local economy. The same holds true at big box stores and online.
The Lowest Price
One of the benefits of buying from a big box store is you’ll usually get a lower price, whether you’re picking up a television or you’re buying a bunch of radishes. When you’re focused on the bottom line, it’s very hard to argue with a lower price — the less you spend, the better your finances are. Of course, there can be big differences based on where you live. Prices in New York City, whether you buy locally or from a big box retailer, are going to be very different than if you’re living in Sioux City, Iowa.
But personal finance is more than just about numbers isn’t it? The price may not be the only factor that affects your finances, so this is worth a deeper look.
The Local Economy
Depending on where you live, you can have a financial incentive to contribute to your local economy. Buying from a store like Wal-mart does tend to mean that your money will be going back to corporate headquarters, rather than staying in town. That means that there is less money available locally to pay for your services or goods. It may not affect your bank account today or tomorrow, but there can be some painful long-term affects.
Quality Over Cost
Another factor to consider is that if you can buy locally-made products, you may have the opportunity to buy higher quality. For instance, locally grown produce may be a little more expensive than what comes in on the trucks every day, but it can taste a lot better. For more durable goods, you may have access to better warranties or easier repairs if you buy something made closer to home. Financially speaking, it can be worthwhile to pay a little more upfront that doesn’t break as easily than to buy something cheaply that you’ll need to keep fixing or replacing.
It doesn’t hurt that many local businesses are also able to offer better loyalty programs or other incentives than their bigger counterparts: in a big business, an incentive has to be approved by many layers of bureaucracy, while a mom-and-pop operation can decide to give you a deal right after you come in. Over time, the option can make a big difference for your finances.
The Bottom Line
Admittedly, it’s hard to look past that bottom line: our concerns about our finances are more likely to be on the immediate return than the long-term benefits. But it’s worth doing the numbers on whether buying locally can really help you out financially.
You’ll find that on plenty of consumer items, it’s very hard to beat bigger companies’ prices. But on certain items, like produce, you’ll have some wiggle room that will allow you to improve your finances as well as help yourself out long-term by buying locally.
Editor’s Question: Without a question, buying local or not is a harder question to answer in a small town, where there’s more of a community. Does prices always win out? Where do YOU draw the line?
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We try to buy local (or mom and pop) as much as we can. In areas such as food, most of our weekly shop is local, organic or both. In some instances. the prices may be higher but the service is usually better. The big benefit for us buying local or in the case of food, selecting local or organic is that we steer well clear of mass-retailers or grocery stores and end up buying less impulse “stuff” that it typically cheap, mass produced and of poor quality. it amazes me how many households are full of things the occupants obviously bought at Costco, or fridges bursting with excess food from Walmart. It just comes with the mass-retail mentality, “buy more, of less quality, but for much cheaper.” Buying local, you tend to actually buy the product you want (through good service) and not just another “thing” because it’s in the weekly flyer.
I like to go to the farmers market on Saturdays. The whole family goes, including the dog. We talk with the retailers, enjoy the weather, and help our local businesses. Yeah, the prices may be higher, but I love the experience and the relationships formed more. It’s all about what people value.
You’re forgetting that you have a better chance of negotiating down the price for a local company and that you can get good deals as a repeat customer.
Why spend your money on multibillion dollar corporations when your neighbors are in a jam? Even if its a few cents extra, the money is going to come back to your community.
Fortunately, although I live in a considerably big city- we still have small local businesses that I really enjoy frequenting. Although the prices may be slightly higher, I know I am getting a quality product because I talk to the people and they take the time out to form a relationship with me which is something that I certainly would not get at a retailer megastore like Walmart.
Small town here – about the only things I buy out of town sometimes are groceries and clothing. Reasons being – the local grocery stores are big chains and the money goes mostly out of town on them anyway. Same with the Only clothing store in town – Fred Meyers… their prices are too high for our local economy. One or two trips out of town per year, when I’m going anyway, are all it takes. It’s 75 miles to the nearest “other place” to buy….
Gas – I’ll buy from a local rather than Freddies tho – the price may be cheaper at Freddies, but the money needs to stay in the local economy – and that’s worth the extra 50 cents per fill up.
Appliances – I buy local. When something goes wrong, I can walk right into the local store (been here 40 years or more), tell them my problem, and they will see to it that I (a valued customer and acquaintance) am well taken care of. They go out of their way for customer satisfaction. Again, this keeps the money in our area. Plus the installation guys are local and can be trusted to go in if you leave your door unlocked, install the appliance, and lock the door when they leave. That says a lot to me. There’s a certain amount of trust and good reputation built up in dealing locally.
In my earlier years when I needed the help, the local appliance dealer would offer me 30-60-90 same as cash deals on the appliances also. Something the big box stores would not do.
Used vehicles – again, local. The dealers here will see to it that we don’t get a lemon and will take care of us – again – in person – customer satisfaction.
I like to be able to walk into a place and deal face to face – therefore my insurance, bank, investment man, lawyers, doctors, are all within a mile of my house. That’s local. That’s keeping the money in our tiny community.
There are many factors where and when I draw a line.
1. The money difference is quite significant
2. Quality vs quantity
3. Service
4. I will not drive 15 miles to Walmart to save $5. That’s hardly worth time and gas.
I do live in a struggling small community. I always try and buy local as I can. I see it as an investment in people, my town and my house value.
Great post, keep up the good work.