The act of spending more money than planned in order to gain a perceived savings. (edited)
1. Buy one, get one (BOGO)
When you shop online, go to the grocery store, or visit other retail locations, there’s a good chance you may come across BOGO offers. This type of spaving technique pushes shoppers to spend more by purchasing multiple items in order to get a free product in exchange. Yet it’s important to evaluate how much you’re spending overall in these situations and whether purchasing multiple items will benefit you in the long run
2. Qualifying for free shipping
Another common way retailers tempt shoppers to spend more money is through free shipping. Many retailers offer free shipping to their customers, but you may need to spend a certain dollar amount to qualify for this perk.
It makes sense: Shipping can be expensive. So, a business needs to clear enough profit on a sale to offset the loss of this expense. Yet, as a consumer, you should always do the math to see if spending more money to qualify for free shipping makes good financial sense.
Let’s say a retailer requires you to spend $75 to qualify for free shipping. Meanwhile, the purchase you need to make is only $40 before tax, and the shipping costs $15. If you pay for shipping yourself, your total cost would be $55 before tax. To qualify for free shipping, you’ll need to spend an extra $20 in this scenario.
Twenty dollars may not be a huge amount, depending on your budget.
3. Spend more, save more
The “spend more, save more” promotion is another common spaving strategy retailers use to entice shoppers to make larger purchases. For example, a retailer might offer a limited-time deal of 25% off purchases of $75 or more, or 50% off purchases of $150 or more.
You may be able to use this type of sale to your advantage if you already need to buy products that surpass that retailer’s discount threshold. For example, if you need to buy a winter coat that costs $80, the previous promotion could save you 25% off your purchase.
But if the discount tempts you to spend more money than your budget allows, proceed with caution. Overspending because you’re trying to score a deal can be unwise.
How to avoid the financial trap of spaving
Anyone can be tempted to spend more money than planned, but these tips may help you follow more mindful spending practices:
1. Use a budget
Setting up a budget is good for your overall financial health. A budget doesn’t mean you have to go without the things you want.
2. Make a list
Writing down a list (like when you’re grocery shopping) may help you avoid overspending on items you don’t need if you’re tempted by promotions.
Of course, there’s nothing wrong with buying food items that are on sale to stretch your grocery budget, as long as you don’t go over the dollar limit you set. That said, it’s also wise to compare sale prices to the product prices at other stores to ensure you’re getting the best deals available.
3. Avoid impulsive purchases
Try setting a rule to wait at least one day before you make a nonessential purchase (or even better, 30 days). You may find that you often change your mind.
At the very least, instituting a cooling-off period before purchasing a product or service gives you time to comparison shop and make sure you’re getting the best deal available.
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