The Difference Between “Saving” and “Not Spending”

While watching the train wreck that is “Extreme Couponing” the other day, I was struck by how so many of these people seemed to have become confused about the difference between saving money and not spending money. One woman was claiming that she’d saved $40,000 on her family’s grocery bill in one year. But would she have really spent $40,000 on groceries in the normal course of events? Probably not. Even if a family spends $1,000 per month on groceries that’s still only $12,000 per year. At $2,000 (and that’s some serious grocery buying), it’s still only $24,000 per year. Very few, if any, households will spend $40,000 per year on groceries.

What this woman really meant to say is that she got over $40,000 worth of products for just a few thousand dollars. In her mind she’d saved that forty-thousand dollars because she hadn’t paid the full retail cost of the items. But the question that remains is: How much money did she spend unnecessarily to “save” that $40K? How many products did she buy that she would not have bought normally? How much money did she blow buying huge quantities of things that will expire and probably be wasted when much smaller quantities would have served her just as well?

I see this a lot. People book expensive vacations but get a discount and claim they saved $2,000. But did they really save $2,000, or did they spend $3,000 for the part of the trip that wasn’t discounted? People buy $200 worth of things on clearance at Target for $100 and claim to have saved $100. But did they save $100, or did they spend $100 on stuff they didn’t really need? When you save money but are still spending, you’re not really saving money. You’re still spending money, albeit less money than you wold have to buy these things at full retail.

The only way this sort of saving works is if four criteria are present:

You really need and will use the items

If the item is something you need (or want) and will use, then your savings might be legitimate. You do want to get the items you use for the best price you can. You just don’t want to convince yourself that you’re saving money when the stuff you’re buying isn’t anything you will use.

You can use it before it goes bad/out of style, etc

If you can use the item before it expires, goes out of style, no longer fits, or in some other way becomes unusable, then your savings might be legitimate. However, if the stuff will expire before you can use it you’re not saving money, you’re wasting money. Having a home full of stuff that you “saved” thousands of dollars on is worthless if half of it will go into the trash can when it goes bad or out of style.

It was something you were going to buy, anyway

If you were already planning to go on vacation, saving $2,000 is a great deal. But if you took the trip just because of the savings, maybe it wasn’t such a great deal. That outfit bought at 50% off is a great deal if you were in the market for an outfit. But if you only bought it because it was on sale, you didn’t save much. If you’re looking for something already and come across a deal, you might be saving money. Buying something just because of a sale isn’t saving.

You considered less expensive alternatives

If you were planning to vacation and only spend $2,000 but then you found the deal that ended up costing you $3,000, you went over budget. If the food you buy is name brand and still more expensive than store brands (and you don’t mind the store brands), you’ve saved money, but not as much as you could have. You save money when you buy the least expensive of all of the acceptable alternatives. If you would have been perfectly happy with the cheaper vacation, food, or clothes, the deal on the more expensive item isn’t really a deal.

There is a big difference between saving money and simply not spending money. Saving money usually happens in conjunction with a spending activity. Yes, it’s great to pay the lowest price you can on items you need, but you don’t want to spend money just to save money. You need to be conscious of what you’re really doing with your money and stop deluding yourself that you’re saving when you’re spending.

The best way to save money is to not spend it in the first place. Don’t buy things you don’t need, can’t use, or don’t have space for. Don’t buy things that aren’t in your budget. Don’t give in to impulses to take vacations you haven’t planned, buy clothes you don’t need, or food you won’t eat just because there’s a deal. Put that money in a bank account and then you’ll really be saving money.

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8 Responses to The Difference Between “Saving” and “Not Spending”

  1. uRabbit says:

    Good article. It really is a shame that extreme coupling even exists. My wife and I thought we would give it a try, but the coupons are for 1) processed crap and 2) stuff we never buy. So, instead, we decided to just be savvy shoppers by making a budget and sticking to a list.

  2. Devin says:

    Well said. Do you think that you could teach this to Clark Howard?

  3. megan says:

    good post.

  4. Carol says:

    As far as exterem coupening goes I also want to know how much money it costs for the shelfing for the storage – the space that cannot be used in the home but still needs to be cooled or heated = the cost of newspapers for the inserts – or dumpster diving. Who needs 42 bottles of mustard esp when dh said he doesn’t even like?

  5. GaelicWench58 says:

    uRabbit’s key points are spot on, so where would the savings be, if any. And for me, the longer the expiration date on a boxed or frozen item, the more chemicals in it.

    Stores are also taking measures so that a set number of coupons are accepted, allowing others a chance at buying products at the sale price with or without A coupon. They need to make their money somehow.

    Very informative article. Keep it up.

  6. Martha says:

    In short, I got this post as “stop being a stupid consumer – choose wisely”. Coupons is just a way of teaching an old dog a new trick.

  7. Barb says:

    Great point, and something that I’ve discussed a lot with one of my sils who is also into being frugal. Too often we’re conditioned into thinking and talking about saving money when reality is like you said – we didn’t spend that money in the first place.

  8. Leonard says:

    What many people don’t know and what a lot of people don’t talk about in the ‘couponing’ world, is that many, many, many of the ‘extreme’ couponers, including some on the show, sell their product at garage sales, flea markets, thrift stores they own, etc. Heck, I will admit that I have done it. There are many times I can get lots of product for free (or even less than free, a money maker with other deals) and then sell it at my garage sale. The one I had this summer grossed $1157 and my cost for the items was $67.90. Not too bad.

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