Generally speaking, you want to keep as many memberships off of your monthly budget as possible. Memberships are charged month after month, and businesses like that arrangement because they get to collect your dollars even if you didn?t use the service.
Gyms are notorious for being able to stay in business by collecting monthly membership fees from those who don?t actually go to the gym.
However, this rule of thumb doesn?t mean that you should automatically eliminate all memberships from your monthly expenses.
If something could potentially save you money ? like a membership to a warehouse club ? that would at least be worth considering. In the end, it all comes down to math.
How Much Does It Cost?
The first thing to think about is how much the membership costs per month. You may wind up paying annually for the membership, but it is still best to think about the cost on a per-month basis.
So, for example, if the membership is $60/year, that works out to be just $5/month. That probably doesn?t sound too bad, but there is a little more math to do.
How Much Will You Save?
This is where things can start to get tricky. When people shop at a warehouse club, they tend to overestimate their savings ? sometimes dramatically.
For instance, if you purchase a large package of soft drinks, you might save $5 over the cost of shopping at the grocery store. That?s great ? right? If you save $5 on the soda, you will have made back your investment for the month just with that one purchase. Or so you may think.
The hidden cost of a warehouse club is in the purchases that you didn?t need to make, and would not have made otherwise. Would you have purchased that much soda if you were just shopping at the grocery store? Maybe, maybe not.
If not, you would have actually saved more money by staying away from the warehouse club ? and you would have saved calories, as well. In some cases, warehouse clubs simply promote over-consumption, leading shoppers to actually spend and consume more in the long run than they would have otherwise.
Use Memberships Responsibly
We are not trying to argue that it is always a bad idea to join a warehouse club. In fact, these memberships can work out nicely ? as long as you use them responsibly. It is your job to shop with a plan, think about your needs, and not fall for the marketing tricks used by the store.
One way to get value in this situation is to use the warehouse club to purchase non-perishable staples and household goods rather than traditional groceries. Clubs like Costco have great deals on non-perishable items. Costco hours for their gas stations aren’t cut off either, so feel free to stop after the warehouse closes for the evening.
For example, you might decide to buy your toilet paper in bulk at the warehouse club. The paper is not going to go bad, so you don?t risk wasting it by not using it fast enough. Also, this is an item you were going to purchase anyway, so you haven?t increased your consumption.
When you apply critical thinking and common sense to warehouse club shopping, you can get your money?s worth in the end.
Do you shop at a warehouse club? Why or why not?
Photo courtesy of: tokaijru
- 8 Investing Tips That All Beginners Should Know About - May 11, 2021
- 5 Reasons Why Freelancing Should Be Your Next Career Move - March 9, 2021
- 5 Ways to Improve Your Sales Pitch and Get Funding - February 22, 2021