Quality vs Cost: How to Spend Your Money Wisely
Being poor is really expensive.
Being poor inevitably leads to further poverty. Imagine that your car fails its warrant of fitness. You can’t afford to get it repaired, but you still need to use it to get to work. You get fines for driving an unwarranted car, and the repair bill gets bigger as the worn part affects other parts around it, or the problem gets bigger. Or maybe your roof is leaking and will cost $3,000 to repair. You don’t have $3,000, so the damage continues turning it into a $7,000 repair job as well affecting your health with the growing mould problem.
The most famous example of the poverty spiral is the Sam Vimes ‘boots theory of socioeconomic unfairness’. You need to buy some good, warm, winter boots. A great pair is $250, and they’ll keep your feet warm and dry, and last for many years. However, if you’re poor, $250 seems like an unimaginable sum of money, so you spend $50 for a pair that lasts a few months. And then you need to buy another pair. And another. So in that time the $250 pair of boots has lasted ten years, the poor person has spent $500 on flimsy, poor quality boots.
In order to live, you need to spend money. Making wise decisions about how you spend your money is vital. There is some truth in Bulgarian proverb “I’m not rich enough to buy poor quality.”
There are six things to think about when purchasing something that may save you money in the longer term.
1. Consider Resale Value
Some things are really one-use-only. Consider fast fashion; it’s designed to be worn for one season, it falls apart, and you throw it out. However, buying something akin to a capsule wardrobe gives you quality, long-lasting, flexible wardrobe options that retain some value. Then, you can on-sell the clothes once you’re finished with them. Consignment shops are becoming popular, not just so people can grab a bargain, but in order to decrease their environmental footprint.
2. Think About Your Cost Per Use
Going back to that fast fashion example, you might wear that $10 top from Shein twice before you realise the fit is awful or the seams start to fall apart. That’s $5 per use. Compare that with the $250 puffer jacket that felt like a complete splurge at the time. Yet you seemingly live in it every winter, and its lasted for years. So far it’s running at less than $1 per wear. Any quality item that you will get a lot of repeat use from is likely to become more cost effective over time. (p.s. pro tip: Shein has terrible human rights standards, the reason it is cheap is because it could be child labour or worse, forced labour from the Uighur people. There are other cheap brands you can buy without the human rights issues).
3. Spend Money to Save Money
This might sound a bit backwards, but buying something might help you save money in the future. Are you a coffee lover, stopping at your favourite café for your flat white every morning? That’s $35 a week, plus the scone or muffin that you invariably buy too. Nespresso machines start at $250—that’s only seven weeks’ worth of coffee. It doesn’t take long before you come out on top.
Or, maybe your washing machine failed and you need a new one. In the meantime, you’re spending $4 a load at the laundromat next door. A new washing machine is $700, and you can get it on interest free hire purchase. That’s 175 loads of washing (it sounds like a lot, but realistically it’s less than a year). This is one form of debt that could be worth it.
4. Your Money and Your Ethics
Is ethical spending only something wealthy people can afford? Buying free range eggs from happy chickens costs you an extra $3 a dozen, and if your egg consumption is high, that could add up to a lot over the course of a year. The same goes for any clothing purchase. Expect to pay more from ethical manufacturers and suppliers for almost every product. You absolutely cannot be ethical 100% of the time; you’d have to be living off the grid and producing all your own food and clothing. But you can make some ethical choices, direct your hard-earned-cash to something you care about, and try to make your values match the companies you support.
5. High Prices Doesn’t Always Mean It’s A Better Purchase
The point is that while the top-of-the-line iPhone might have all the bells-and-whistles, will you actually use them all? Most people won’t – in fact, besides Facebook, Messenger, camera, phone functions and a few apps, most phones (no matter what stable they come from) are way more equipped than we ever need them to be. Unless you’re gaming on your phone, you don’t really need expensive processors.
The most expensive thing isn’t always the best or best suited to your needs, so take time before spending lavishly to be honest with yourself. That $10 box of muesli isn’t that much nicer than the $5 box. But a $40,000 Toyota might be much more reliable in the long term than the $25,000 car.
When spending, do a quick bit of mental math:
- Is there an upkeep or repair cost to factor in?
- Check the reviews, do other people recommend this product over another?
- What’s the outcome if the quality is poor? A few average breakfasts, or huge repair costs?
- Are the purported benefits worth the increased price?
6. Are You Paying For Quality or the Brand?
We all know that an iPhone is better than an Android phone, right? That Levi’s are better than some local jean manufacturer? Nurofen will also work better to alleviate your headache than the supermarket home brand version (even though they both contain 200mg of ibuprofen)?
Many brands seek to build a reputation of good quality that they can trade off even when their quality falls. Don’t assume that because you recognise a brand name, that it’s actually the best quality and option for you.
7. Hold Out For The Sales
There are four inevitabilities in life: birth, death, taxes, and sales. Once you’ve done your homework on the item you wish to purchase, if you can wait for it to come on sale, do so. Do you really need that new lounge suite now, or can you wait for the 30% off Easter sale?
The sales cycle is usually quite predictable – think every major public holiday, the end of the financial year, or “it’s the weekend” (note: that only applies to Briscoes). Know what’s ahead and plan for it.
Make a Trade Off to Make it Work for You
While there’s so much you can’t control; petrol prices, the fridge breaking down, or the rate your kids outgrow their shoes, there are some choices you can make in the midst of the chaos. You cannot avoid spending money; but take some time to make decisions that may be better for you financially in the long term.