One of the oldest pastimes in America is spending money. Whether you have it, or do not, people love to spend on everything. Regardless of how much we focus on saving, we still cannot stop ourselves. If there is a sale, or a "three-for-one" deal, we jump on the chance. Everyone has done it. We spend more money in the hopes it saves us money. There is actually a term for that called "spaving," it is costing Americans more than they think.
The idea of "spaving," was brought to life in an old episode of "I Love Lucy." Lucille Ball buys all kinds of items on sale, spending tons of money, much to the chagrin of Ricky. Ricky becomes upset, explaining to Lucy that just because things are on sale or they have a good sales pitch, it hurts financially. That is the shortened, far less comedic version of it. But that is essentially the same idea today.
Financial Planner Bill Dendy says, minus things being more expensive now, we are hit with new kinds of things that cause "spaving."
"It is hitting us now in the form of delivery fees, and other incentives, to make that one extra purchase to buy more than we actually need to buy," he says.
The perfect example is at a gas station. You go inside to purchase a sports drink. They will say "you can save money if you buy three of them." So, you end up buying three, thinking it saved you money. Then you drink one of the sports drinks, and never touch the other two, which might end up being wasted. That is a crude example, but that is the kind of thing Americans are facing.
Reportedly too, it is costing Americans upwards of $50,000 out of their retirement. It can apply to online shopping too. You have $42 worth of goods but have an $8 shipping fee. So, you buy $50 worth of more stuff to get the deal that allows free shipping. It is our newest form of gluttony.
"People who do this end up buying things they do not need...they are not separating wants from needs...and end up spending a lot more than they would if they stuck to their budget, and just paid that ten-dollar shipping cost," Dendy says.
Saving in this economy is the name of the game. Things are more expensive, wages have stayed the same, and people are struggling to ever see retirement in their future. But then we buy more things, in hopes of saving more money, that further ruin our retirement plans.
It has become a vicious cycle we cannot seem to break, and without proper planning and budgeting, it can ultimately ruin your financial future. One Amazon purchase at a time.
"Your money is not doing what it should do...you might be better off just making the single purchase, or more effectively spending money," says Dendy.
Dendy says basic planning and sticking to a budget can help you avoid the pitfalls of "spaving."
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