Those huge jars of pickles at the grocery store are hard to resist. It’s not clear they save any money; if anything, you probably snack on more pickles once the jar is in the house. But there’s something appealing about having enough pickles to last a long while, and after the purchase you don’t think twice about grabbing a few to snack on.
While bulk shopping based on the idea of getting more stuff for less money can generally be a smart financial move, there are exceptions. It’s worth being aware of these possible traps so you can avoid getting stuck with more pickles than you can eat before they spoil or having unexpected cashflow issues.
If you’re over the age of 20, the idea of Costco is likely already familiar to you and has been a part of our culture for decades now. Tips and tricks on how to save money by buying in bulk have been around just as long. And naturally, there’s a grain of truth to this advice: everything else being equal, buying in bulk can give you a lower price per unit.
However, the bulk buying mentality can backfire or simply be a waste of money. To help you decide when buying in bulk is a good idea and when it can become a costly distraction, here are some common lessons.
- You have to pay more up front.. The per unit price might be lower, but you must consider how much you’re spending. Do you have fewer grocery dollars to spend in the future because of this splurge? Is cashflow an issue? Don’t fall for the false economy of a bulk purchase only to have to buy other things later at a higher price because you can’t wait for a deal.
- Items can go unused or spoil.. How many times have you bought a large bottle of something, thinking you’d save money, only to use it sparingly or let it spoil? Common examples: the gallon jar of mayonnaise at the grocery store, a large 5-gallon bucket of paint for a home improvement project, or even a large box of books from a yard sale priced to sell.
- Inconvenient to store large quantities.. Picture a big closet in your bedroom filled with a stockpile of paper goods, enough to last a few lifetimes. Keeping a large stockpile can seem like a smart experiment to save money. But in practice, the convenience of buying in bulk is negated by the inconvenience of storing it all somewhere in your house. And as the experiment runs for years, it gets hard to know how much of the stash you’re actually using.
- Ties up your cash.. A big stockpile of paper towels, toilet paper, and other goods means a lot of cash sitting in a closet. It’s easy to lose track of how much all those goods cost or how long it will take to use them up. A stockpile doesn’t have to cause financial difficulty to be a bad deal; sometimes it simply isn’t worth it, and the better move is to use up what you have.
To be clear, there are times when buying in bulk can be a smart financial move. You just have to be careful and weigh the trade offs. Don’t fall into the trap of thinking that a lower per unit price is the only metric that matters. It’s not, especially if you’re trying to manage cashflow as a part of a budgeting plan. The point isn’t to tell you what to do, but to share examples of when bulk buying can be great and when it can go wrong. From there, you can make a decision that works best for your life’s priorities.