Businesses regularly rely on markdowns and other marketing tactics to increase sales. While these offers might be enticing, many of these “deals” are just psychological tricks designed to get you to spend more.
One example is “spaving,” a relatively new term derived from the combination of “spending” and “saving.” It refers to the concept of spending more money to earn greater savings. One of the most popular forms of this marketing type is BOGO or buy one, get one deals.
Although it may seem counterintuitive, retailers often employ this tactic to entice customers into spending more than they otherwise would in the interest of saving money overall.
Examples of Spaving
Spaving comes in many forms, but all are designed to encourage you to increase your total purchase amount.
Buy One Get One (BOGO) Deals: BOGO deals usually come in the form of buying one item at full price and getting another similar item at a discount. While you may save on the second item, you likely wouldn’t have purchased the additional item without a deal in place.
Free Shipping Thresholds: Many online retailers offer free shipping once you spend over a certain amount, like $100. This can lead you to add more items to your cart that you wouldn’t have otherwise bought just to avoid the shipping fee. Many times, the cost of the additional items ends up being more than the shipping fee alone.
Bulk Purchase Discounts: Businesses also offer special savings on purchases over a high dollar amount, such as “Spend $500 and save $100 on your purchase.” This practice can lure you into buying more just to meet the discount threshold, resulting in buying things you don’t need.
The Downfalls of Spaving
In theory, spaving may seem like a savvy way to save money. However, in practice, it often leads to excessive purchases that can throw your budget off track and even lead to high-interest debt.
Excessive Spending: Spaving can cause you to spend more than you intended. Without the lure of a deal, you likely wouldn’t have spent $500, but the opportunity to “save” $100 can make you overspend just to feel like you’re scoring a deal.
Creating Waste: While buying in bulk may seem economical and certainly can be in some instances, it can also lead to extra waste when you buy more than you will realistically use. For example, perishable items may expire before you have a chance to consume them all.
False Sense of Necessity: Limited-time deals can trick you into feeling urgency and convince you to purchase items now solely due to the promise of a deal. You may think, “I’m going to need this and use it eventually, so I may as well go ahead and buy it now.” But if it’s not something you know you’ll use soon, it’s likely not sensible for you to buy extra and engage in unnecessary spending.
Tips to Avoid Spaving
Hope is not lost! Fortunately, there are many strategies you can use to avoid the pitfalls of spaving and improve your finances. Remember, spaving is more of a psychological trick. So, if you stop and analyze the situation, you’ll often realize spending the extra money isn’t practical.
Stick to Your Budget: While budgeting might not be the most enjoyable task, it’s the best way to manage and grow your money. When you set limits on your spending and actively review savings goals, you’re less likely to give in to impulse purchases and limited-time deals.
Only Buy What You Need: Make a list, check it twice, and don’t deviate. Build your shopping list based on only the items you need and work to quickly get in and out of the store. The longer you linger, the more likely you are to buy more. That’s why businesses spend so much money designing the layout of their stores and the location of promotional offers – they want to grab your attention and keep you around for as long as possible.
Do the Math: Numbers don’t lie. If you’re unsure if something is a good deal, take a moment to crunch the numbers. Everyone has a calculator in their pocket these days. Take out your phone and do the math. Sometimes, the perceived savings may not be as good as they seem.
Unsubscribe From Sale Alerts: Resisting temptation is hard when it’s constantly flooding your inbox. If you feel you’ll have a hard time resisting the constant exposure to promotions, unsubscribe from sale notifications and unfollow businesses that spam your social feeds with advertisements.
Shop Sales Smartly: While looking for sales and discounts is a good saving strategy, don’t let it dictate your shopping list. Start by adding your basic needs, then check for any coupons on those items. Afterward, see if any other deals will be useful for you if your budget permits.
We’re Here to Help!
While shopping is necessary, you don’t have to let sales or limited-time deals derail your financial plan. By understanding how spaving works and analyzing the situation logically rather than emotionally, you’ll be able to make better financial decisions.
If you want to learn more about the various savings accounts available to you, we’re ready to help. Please stop by any of our locations to learn more!
Each individual’s financial situation is unique and readers are encouraged to contact the Credit Union when seeking financial advice on the products and services discussed. This article is for educational purposes only; the authors assume no legal responsibility for the completeness or accuracy of the contents.