Tuesday, May 3, 2011

What's your real savings?

A lot of times, money-saving bloggers like myself will describe their savings as a percentage of the retail price.  For instance, in this great Publix trip I took last week, I purchased chicken, milk, eggs, bread, and spices, as well as 14 containers of Gas-X, which was a moneymaking item.  In total, the products retailed for $83.11.  I spent only $1.11, so I saved 82/83.11 * 100 = 98.7%.  Right?

Well, not really.

Had it not been a moneymaker, I would not have bought Gas-X at Publix for full price.  I wouldn't have bought it at all!  So saying that I saved money on it isn't really accurate.  It shouldn't be included in my savings at all.  Only the items I definitely would have bought should be included.

And I would have bought the other items, but not at Publix at full price.  I would've purchased the milk, eggs, and bread at ALDI; the chicken at BJ's Wholesale Club, and the spices at Walmart.  Here's a comparison of the prices I would have paid for those items:

Item Publix price Usual price
chicken $15.99 $10.49
milk $3.75 $2.09
eggs (2) $3.78 $2.18
bread (2) $2.75 $2.58
spices (2) $1.38 $1.18

Total $27.65 $18.52

So, had I bought those items at my usual stores, I would've paid $18.52 for them.  But I only paid $1.11.  So really, I can say that my savings was ($18.52-$1.11) / $18.52 * 100 = 94%.  Still impressive, but not as impressive as the first number.  And I really only saved $17.41, not $82. 

So be careful when you state your savings - it should be based on what you would really pay, not on what the store thinks you should've paid. (And remember - don't compare savings percentages!)

For more frugal tips, please check out the bloggers listed on the left sidebar under Frugal Tips Linkups. There are lots of great ideas on each blog and I'm sure you'll find lots of wonderful tips!

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Cathie May 4, 2011 at 9:31 AM  

EXCELLENT. I think there many people who need to read this. It reminds me of how I explain to people the situation I had while raising my 5 kids w/out child support. I didn't "save" hundreds of dollars on groceries every week, because I couldn't "bank" that savings, as it was money that didn't exist. I was merely spending less for what I bought. Savings implies that you still have what you saved, and in cases like this that may not be so.

Ruth May 4, 2011 at 6:39 PM  

This is a great post Laura. Couponing is not about "beating" everyone else, it is about saving money in a way that works for your family. I am always impressed by your shopping trips considering you buy kosher and you buy a ton of fresh produce.

I personally post my results the way I do week after week is to a.) hopefully inspire people to start couponing and b.) to show that consistency is key. And while my percentages are usually quite high, you are absolutely right, I buy a lot of stuff I wouldn't normally buy.

Of course in my pre-couponing life, I did shop at primarily at Publix and paid regular price for everything and spent about $300 a week for my little family. (Can you imagine???!! I cringe just thinking about it.)

Anyway, thanks for the words of wisdom. I'll be linking up tomorrow after my Publix trip! :-)

Keli May 4, 2011 at 9:34 PM  

This is so true. I never thought of it this way, but I never understood how I should calculate my savings either. Because like you, I buy a lot of things I normally wouldn't because they're free or moneymakers after coupons. This is a great post!

Unknown May 6, 2011 at 4:08 AM  

Thanks for a different perspective. I look forward to reading more from you! Visiting from Fantastic Frugal Fridays. :)

Theresa May 6, 2011 at 9:54 AM  

AMEN!!! There are two debt help shows here in Canada that will introduce a couple who are overspending every month by say $2000 dollars. The financial advisor will give them some tips to cut their spending and then say something like "they are now saving X amount of $" when in fact they never had that money to start with, so they are not saving at all. Savings to me has always meant setting that money aside and having it grow. It makes me want to throw something at the tv. :) Okay, rant over. Great post.

Barb @ A Life in Balance May 7, 2011 at 3:01 PM  

Great point, and one that I'm guilty of making. Another way to talk about it, especially with kids, is about stretching one's income. There's no savings implicit in stretching, though one could say that one stretched one's income in order to save money towards a goal. But I like "spending less" better.

The Gentle Mom May 7, 2011 at 8:51 PM  

Agreed! The thing that always gets me is when your receipt says "Today you saved $XX." Well, no I didn't, because I wouldn't have bought these items at the ridiculously high original prices listed on the receipt!

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