Wednesday, March 23, 2011

How Much Are You REALLY Saving?

There was a thread recently on that asked how to determine how much you are really saving.  I thought it was a good subject and wanted to write a little more on the topic.

It's so easy to get hung up on the "I saved 90%" posts and even to get hung up on saving a high % yourself.  I know I have gotten to where it bugs me if I don't have a savings of at least 70% on any given shopping trip.  I've also convinced myself I'm saving more at Publix because my % of savings is higher there than it is at other stores.  However, I have to remind myself (and you) that it's not the percentage you save, but the dollars!

There are really two mistakes that we make that have us thinking we are saving more than we are.

1. Focusing on the Percentage! This is just what I was talking about above.  When you get focused on the %, you aren't really thinking about the dollars.  You can save 90% all day long but if you are spending twice as much as you would have or buying things you wouldn't have to get that 90% then it doesn't really matter.  In order to get a 90% savings you typically have to buy a lot of items that end up being free or giving you overage.  That's great if those items are things that would normally be on your shopping list, but if you are buying them just because of the "savings" then it's not really savings.

2. Buying Things You Wouldn't Normally Buy! just because they are on sale or free.  In most states (mine included) you still pay sales tax on the full amount prior to coupons.  Sometimes that tax can add to more than you might be saving or getting back in overage. If you are buying an item just because it's FREE, it's not really FREE.  If you are buying it because it will give you some sort of overage, you have to do some calculating to determine if the overage is really overage (after you pay tax).  I see this a lot also on items that produce Register Rewards (or similar programs).  If you are buying something for the Register Reward it will produce, you have to remember you are still spending money out of pocket to get that Register Reward.  The only time that I think it's worthwhile to do this is when you already have a Register Reward that's about to expire and you need to roll it (or them).

The best way to make sure you are really saving money is to stick to only buying products you'd normally buy (and will use) and to track your total spending.  I use the Spending Tracker from the Coupon Project to track my total spending and savings.  Remember that the % you save on each trip isn't nearly as important as staying within your budget and spending less overall.

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