Shopping is simple, but not easy. We face a minefield of small, subconscious errors that lead to bad decisions. But there are some simple money saving tips that will come in handy. Understand these three mistakes and you’ll save money when you’re shopping.
1. Lost in percentages
Let’s say you have a choice to either buy a DVD for £20 across the road or travel an extra 10 minutes to buy the same DVD elsewhere for £10.
You’d probably travel further to get the DVD at 50% off.
Now let’s say the shop across the road sells the TV you want for £2,000 and the other shop for £1,990. Do you make the longer journey this time, when the saving is less than 1%?
If you answered No, think again. In both circumstances the saving was £10. So do you want to save that £10 or don’t you?
One of the most basic money saving tips is: Don’t be confused by percentages. Think about what each pound means to you by imagining how you’d feel if you lost it on the street.
2. Contrast effect
You open your eyes and it’s pitch black. You turn on a light and it’s painfully bright.
Yet it isn’t really. The light reveals itself to be perfectly normal when your eyes adjust to the contrast.
We suffer this contrast effect when shopping too. If two prams are displayed side-by-side, one better quality than the other, you’re more likely to pick the better one. However, if you’d seen the cheaper one by itself, you’ll have noticed it was adequate for your needs.
If the shop is particularly cunning it’ll display a third pram of middling quality, but with the highest price tag. Now you even more readily believe you’ve chosen well when you go for the better quality, middle-priced pram.
Your money saving tips here: Before comparing items, have a firm idea in your head – or written down – about what your requirements are. Don’t pay for anything more.
3. Ostrich syndrome
Try to imagine all the goods that are made in the UK in a whole year, and all the services that businesses and professionals provide.
Now add up the cost of buying all of those.
Multiply that number by five.
What you’ve got is the UK’s total debt, according to the most recent estimate from McKinsey, the government and business consultancy firm.
Normally you’ll read a figure like that, think it’s scary, and then carry on with your shopping on Saturday morning without another thought.
This time don’t do that. We all make the mistake of under-appreciating the chances of a disaster striking, merely because it has never happened to us before. Psychologists call this ‘normalcy bias’, which is first cousin to ostrich syndrome – burying your head in the sand.
Continuing to shop on credit cards is a disaster waiting to happen. There are also less obvious disasters that could put you in trouble, such as the nation’s debts as a whole, or Europe’s.
You don’t even have to understand how these things can affect your jobs, pay rises and debt levels.
You just have to accept that disasters can, do, and will happen. Then you can prepare for it by planning for emergencies before you next go to the shops.
The last, but most important of all the money saving tips when you go out shopping is: Don’t spend it if you don’t have it.