In order to be a Ninja Piggy for your finances you need to be the master of your Expenses.
Businesses have created very advanced methods to take as much money from you as possible through clever marketing which uses psychology to trick your brain into paying more. Corporations spend billions of dollars each year at finding new ways to entice you into spending more and their methods continue to get better.
There is a way to defend yourself from the advanced marketing tactics. It requires discipline and a different way of thinking. Below is a common marketing trap that can wipe out your ability to save, along with some helpful tips on how to avoid.
Tactic #3: Counter the price slash
The 3 Different Types of Discounts
Everyone loves snagging a good deal. Unfortunately, not all deals are beneficial to us. Here are the 3 types of discounts and the things to be aware of with each:
1. The “I wasn't going to buy it but it it's too good of a deal to pass up” deal.
You go into a store and are blown away by an item they have on sale. You don’t need the item and you haven’t budgeted for the expense. You end up buying it anyway because you can’t pass up the “savings”. This is the most destructive discount to your own finances for two reasons. The first reason is that you are spending money that you weren’t planning on spending, on something you don’t really need. Another damaging aspect is that by getting a great deal it gives you the feeling that you are doing something smart with your money. You brag to your friends about how good of a deal you got and they are impressed. If you’ve ever purchased a deal on Groupon, only to let it expire after you realize you never really needed it in the first place, then you’ve fallen for this type of deal.
2. The “I’ve been needing/wanting this and now that the price is lower, it’s time to buy” discount
You’ve been staying disciplined. As much as you wanted to buy a Kindle Paperwhite, you know you just don’t have room for it in the budget at it’s current price of $119.99. It’s at the top of your list on things to buy, but you just can’t justify buying it right now at your current price. You have it sitting in your Amazon shopping cart, just in case. Then you hear an announcement from Amazon’s CEO Jeff Bezos. Amazon is releasing a new version of the Kindle. The price on the current model you’ve been eyeing drops by $30. You complete the purchase on Amazon, happy with yourself for holding out until a good deal came along. Tech gadgets can often be had for a lot less if you are patient and don’t need the current model. Sometimes, it pays to wait.
3. The unexpected discount
The unexpected discount is the best discount of all. You’ve been saving up for a new TV. You know the exact model you want and you walk into the store with cash in hand to buy the TV for $900. You get up to the cash register pull out the $900 and the guy at the register says, “that’ll be $699.” You think to yourself “this can’t be right” and give him an inquisitive look. He reaffirms by saying that the item just went on sale and the $699 price is correct.
The unexpected discount is by far the best discount. You are buying something that you have determined you need and you have the money to pay for it. The unexpected discount leaves you with $201 that you can allocate elsewhere in your budget, and hopefully the money finds its way into your savings/ investments.
Next time you find yourself buying something on sale, ask yourself - What type of discount am I getting?