ZigaForm version 6.1.2
Home > All of our financial tips > How to Spot a False Economy So You Don’t Lose Out
How to Spot a False Economy So You Don’t Lose Out

How to Spot a False Economy So You Don’t Lose Out

How to Spot a False Economy

If you’re not the kind of person to make extravagant buys such as big holidays etc., then you might be thinking this isn’t something that applies to me. However, it’s actually the cheaper purchases that where a false economy mainly comes into play. It’s all down to psychological trends that actually make you buy into a false economy.

Do you ever get that feeling that you’ve paid more than you should have for certain products? Here, we just want to highlight what a false economy is to create a sense of awareness in order to make better choices. Also, we’re going to look at some points for you to consider to try and help make your money go that little bit further on everyday spending.

an asian girl realising a supermarkets false economy system

What Is a False Economy?

A false economy is defined as “an apparent financial saving that in fact leads to greater expenditure.” Which means, something that appears as a cost-saving exercise in the short-term, but actually costs you more money in the long-run. For example, have you ever bought something on the cheap, only for it to break soon after? Forcing you to spend money to either fix it or replace it? This is essentially what’s known as a false economy.

Similarly, supermarkets often promote what seem like deals, only for you to look closer at the offer to realise it isn’t really an offer at all! Money.com published an article about miniature Coca-Cola cans – the cute, stylish packaging helped boost sales of the mini cans to 278% higher than those of regular cans in a trial marketing period. This happened in the US, but the exact same thing happens here in the UK. How many times have you been persuaded to buy 3 of something due to the draw of a yellow sticker and a promise of a “saving?” We all do it!

Here are some tips to help you avoid falling into the trap of a false economy:

Sometimes a Brand Name Is Better

Even if a an own brand of something is cheaper, try to find out whether it’s going to be better. A good example of this is washing up liquid. A brand name may be £1.50 and an own brand may cost 75p. But if you need to use three times as much of the own brand as you do the brand name you’re not going to be saving any money.

Yes, this is essentially a trial and error system, but it’s really just about having the awareness that this is actually happening and learning from it which will keep you cash savvy.

Beware of the Yellow Sticker

If you only need the one of something, and you’re not going to be needing any more in the future, then be careful not to fall into the trap of those yellow, red (whatever color they are) discount stickers.

Sometimes the discount offers you 3 for 2, which seems like a massive bargain, it is – but only if you’re going to use it. If you only need one of a certain product, then you’re spending more when you don’t need to. As mentioned above, if you can develop a conscious thought of this when you’re out spending, you’ll probably end up with more cash in your pocket than you’d actually expect.

apply now