Are discounts, coupons and sales really saving you money?

Swati believes that shopping during sales and discounts or using coupons are signs of frugality and indicates judicious use of money. Her logic is that instead of focusing on negotiating or earning more money or investing it, she is saving in this manner.

It is the ‘sale’ season and she has been picking up a lot of goods at ‘insanely cheap’ prices. She cannot quite believe how less she paid for what she bought. But the question is whether she is really being frugal and saving money.

Frugality is about being resourceful. While Swati might think that using discount coupons and shopping during sales make her frugal, in reality the opposite is true. A ‘20% off’ coupon may seem good, but it is usually 20% off on Rs 5,000 or 20% off on the entire purchase. Such offers appear good, but they almost always force the buyer to pick things they do not need.

So they inevitably land up with a lot of frivolous purchases in the name of a good deal. Posters screaming ‘Buy 3, get 1 free’, ‘Hurry! last 2 days’ and discounts on expensive products are similar offenders. Some of these so-called sales are not genuine.

Many vendors are known to hike prices and then offer these items on sale. In the process, they create an artificial discount. This may be a feel-good factor for the buyer, but did they really buy those goods at a lower price?

Discount coupons, deals and sales have the power to encourage buyers like Swati to consume what they don’t need, while making them believe that they are being frugal. That is not to say that all sales and discounts are bad and Swati should avoid them. However, for the sake of her finances, she should know the difference between bargain hunting and true frugality.

Swati must realise that she is not only spending more, but is also spending carelessly. Discount-induced spending may not actually offer her a monetary benefit. It’s mere psychological play of the vendors. In reality, she is just shopping and being a typical consumer.

It is definitely a good deal if Swati ends up saving money on goods that she was already planning to buy. Searching for deals, discounts and bargains is a different story though. It becomes a problem when buyers overspend or buy things they did not even want.

(The content on this page is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.)

Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.