Tip #17: Buy generic for the stuff you don’t care about
November 22nd, 2008 - 76 Comments
Today’s tip is to buy generics for the stuff you don’t care about — while continuing to buy brand-name for the stuff you do care about.
When I was growing up, I was a pretty good kid, but I still remember one of the most annoying/bratty things I ever did. For some reason, I demanded that my mom buy me this expensive shirt (it was Ralph Lauren, I think). My mom tried to talk me out of it for HOURS, but I screamed and cried and she finally got it for me. The next day I wore it to school, where I was on lunch duty, and my dish that day was berry cobbler. Because I was a young and dumb, I thought it’d be fun to smack the cobbler with my spoon — which immediately turned my brand new shirt purple and ruined it forever.
The cost difference between generics and brand-name goods can be significant when you add it up, but the differences in quality have been steadily dropping for years. Yet we tend to buy what we know, which is always amusing because I have friends who insist advertising does not affect them. They say this while eating Cheez-Its, holding a Starbucks frappuccino, and paying for their new Nike shoes with money from their Kenneth Cole wallet.
When it comes to generics vs. brand-name goods, one of the most under-considered factors is prioritization. If you want to save $1,000 this month, you have to prioritize because you can’t have the best of everything. So buy brand-name for the stuff you care about, and cut costs mercilessly on commodities you don’t care about by buying generic.
My friend Jim Blomo does this better than almost anyone else I know:
I remember him calling me up a while ago, telling me he had just gotten another raise. “Awesome!” I said. Ironically, that was the same week he moved into an even cheaper place to live. Maybe it’s not actually that ironic. Whereas a lot of us take our new raises and spend it, really rich people take those raises, invest them, and continue living on the older wage that they’ve become accustomed to.
He makes conscious choices about what he spends his money on. Jim has told me over and over that he doesn’t care much about living in a fancy place, so he saves money on that. He cooks at home when he can instead of eating out every day. But he loves outdoor stuff–biking, camping, travel. And so he splurges on those things. He has a top-of-the-line bike. He just got back from a week-long trip to New York, just for fun.
Read more about Jim’s conscious spending.
What could you de-prioritize?
If I were to ask which of your purchases you don’t care about, what would you say? Would you say you don’t really care about your hair products? Or that you could probably live in a cheaper place? Maybe you’d say that you don’t need to eat fancy cheese.
Most of us don’t think like this. We’re also hesitant to experiment with downgrading. “But Ramit,” you might say, “I need that shampoo. My hair goes crazy without it!”
Maybe it does. Maybe not. But you won’t know until you test it by buying a less-expensive comparison shampoo and try it out. Until then, you’ll slavishly continue buying the more expensive goods. Combine all the name-brand things you buy and you could be overspending by thousands each year.
(If you’re worried about the quality going down, think again: The world is full of people claiming they can tell the difference between things like wines, soft drinks, and shampoos, and when you run double-blind experiments, of course, they really can’t. More about them in my delicious/expertise bookmarks.)
To put it bluntly, we can’t afford to buy the best of everything. When you buy, what can you cut costs on by buying generic?
How I balance quality with generics
For me, I do two things: First, I experiment regularly with the stuff I buy to see if I can downgrade. Recently, I bought generic Safeway sandwich cheese (those little orange squares). They tasted horrible, so I went back to buying Kraft cheese. That’s right, I live large.
Second, when I buy something that I care about, I buy top-of-the-line products and hold them for a long time. But when I buy something I don’t care about, like shampoo or luggage, I cut costs mercilessly. Read more about in Conscious Spending: How My Friend Spends $21,000/year Going Out.
I asked my researcher to go to Safeway and dig up some cost comparisons. Here’s just a sample of what he found:
- Can you really tell the difference between Cheerios ($5) and the generic version ($2.50)? Have you ever tried?
- What about prescription drugs, batteries, or vitamins? How much could you save each month?
- Would it be worth trying out some generics to see which you’d be willing to compromise on?
Of course it would. Even if it costs a little extra to duplicate what you’ve got in generic, it’s a spend-once-save-forever proposition: If you save 50% on Cheerios for the rest of your life, that’s a lot more than the $2.50 you spent on trying it out.
Some examples of areas you could save money: Toiletries, food, clothes (especially jeans, gloves, underwear, undershirts, slippers), stuff for your pet (I would rather feed my pet a box of napkins than buy Premium food….this may be why I don’t have a pet), and auto stuff.
Try it today: You can’t get the best of everything. What can you compromise on?
Total savings: $50 to $500 per month
Last thing to do
1. See other tips in the Save $1,000 in 30 Days Challenge
2. Leave a comment on this post describing how much you’re saving with this tip and any unusual techniques you use to make this tip work.
If you liked this tip, check out my Premium tips — one long, tactical tip per week. Save money or get a 100% refund.
Alright, today is the beginning of an entirely new chapter of IWT. I just got back from a last-minute weekend ...Read More