Mind Your Money

You work hard for your money, though it seems to buy less every day. Prices keep going up, and your money must go farther. How can you make it do that? The more you know about how sellers persuade you to spend it, the better decisions you can make about keeping it

WE LIVE in a consuming society. From all sides come messages urging us to spend. Newspapers and magazines, radio and TV, street posters and billboards flood our minds with messages that we may not consciously remember but that lead us to buy certain products. Manipulation goes on in more ways than you would imagine, to separate people from their hard-earned money.

Children are manipulated by toy ads, teen-agers by disc jockeys, and parents are lured into installment buying at startling charges. In his book The Innocent Consumer vs. The Exploiters Sidney Margolius says such manipulation prompts one to a “massive waste of family money and a diversion of family resources” needed for other more important things.

We are persuaded to buy in many ways. Let’s consider a few:

From all sides we are told to buy to be happy. But when we buy the item and take it home, we find that little has changed.

A mother sees pots and pans marked “gourmet” cookware. This suggests she could make better dinners with these. But we all know that the quality of cooking usually depends on the ingredients and the skill of the cook, not on what the manufacturer calls the pot.

The father sees a beautiful illustration of fine furniture, with the promise that he could make it if only he had a certain expensive power tool. No doubt such tools speed the job, but will this tool really turn him into a skilled craftsman? Craftsmen have made exceptional furniture for centuries with far simpler tools.

You would like to take beautiful pictures, but buying the most expensive camera will not necessarily make you a master photographer.

If you look at what a device actually does, at how much you really will use it, and at how great your need for it actually is, your money will go farther, and you will get more benefit from the things you buy.

Merchants of Discontent

Manufacturers do a good job of selling stoves, refrigerators, television sets, and even automobiles and clothing to people who already have these items. How? By making people feel that what they already have is out-of-date. Marketing people make the public style-conscious, then switch styles. There are various ways to change styles, but, as Vance Packard said in his book The Hidden Persuaders, the “use of color is one of the cheapest ways it can be done.”

The merchandisers thus become “merchants of discontent.” You have the “old style,” “last year’s color,” one that is not “up-to-date.” Before long you begin to wonder if you should not get a new one. This is the same method automobile manufacturers use to make you dissatisfied with the “old” family car, even though it still runs beautifully and does not look bad.

Cash or Charge?

There is another way merchandisers encourage you to spend more than you should. Their employees are trained to ask: “Cash or charge?” They may suggest that you apply for one of the store’s charge cards. Charging makes it easier for people to buy. Major corporations have proven that this is true.

Less scrupulous stores may use credit to hide the real cost. Rather than quoting the price, they merely quote the monthly payments. An appliance retailer said: “We prefer to say ‘$12 a month.’ Giving the total price merely confuses the customer.” But often it is the monthly payment that is used to confuse him. A store manager said: “You can raise the average customer about a dollar a yard on carpet through credit up-trading. We’re more apt to quote with emphasis on payments than on dollars per yard.” Thus, the monthly payment is quoted on a higher price than the customer thinks he is paying.

Does widespread use of credit damage families? Yes, especially those who need to watch their funds the most. There is the high finance charge, the temptation to buy unneeded or overly expensive items, and the risk of overindebtedness. In the United States alone several million families​—many of them younger ones—​are in debt trouble.

So, to make your money go farther, be careful about consumer credit.

Read the Ads

Knowing how to read sales ads in the newspapers is another way to make your money go farther. Remember, some sales are legitimate; many are not. Here are some points on getting the best out of them:

Watch for seasonal sales. In many places business declines after the Christmas rush, so stores run January sales. Also, purchases of summer and winter clothing drop off midseason, that is, January–February and June–July. These are times to look for such sales. Some of the merchandise may be shop-worn, and the selection may not be as great. But careful selection at these times often can save you money.

A going-out-of-business sale may be legitimate, but be careful. In some stores the “going-out-of-business” sign seems never to come down.

Watch what the ads really say. “Regularly $99.95, now $59.95” should mean, if true, that the price will go back to $99.95 after the sale. “Comparable value $99.95” means much less. The store says this item compares with higher-priced goods, but that comparison may be only in the store owner’s mind. “List price $99.95” means even less. This is the price printed on the manufacturer’s list, or on the box. It could have little relation to reality, and may have been set excessively high so stores can seem to give bargains by marking it down.

“Below manufacturer’s cost” raises more questions, such as: Why? Was it a poor seller? Has it been discontinued? Are parts no longer available?

“Save!” Remember that this eye-catching word usually has only one aim​—to get you to spend. Words like “Special!” “Reduced!” and “Clearance!” obviously mean no more or less than the store manager wants. Even in well-known stores more than one employee has been told: “Mark it $7.95, so next week we can mark it down to $6.50.”

We fall victim to such games because we want to find a bargain. You can protect yourself by learning price and quality. Know what things cost. And remember, nothing is a bargain unless you really need it. Even if buying it could really save you 50 percent, not buying it would save you 100 percent!

Shop Around

It has been reported that members of lower-income families (who obviously need the savings the most) are less likely to shop in more than one store than are buyers from more prosperous families.

Can you save by comparing prices in several stores? Of course you can! In the U.S.A. the Consumers Union found that prices for the same home appliance varied from $259 to $370 at different stores.

Cutting Your Food Bill

It has been estimated that many housewives could cut their food bill as much as 25 percent by shrewder shopping. Food is a big part of your family’s expense. How do the experts say to save on it?

First, you should plan. You can save by buying once a week, rather than every day. You can watch for sales, and you can buy food products when they are in season and cost far less than they do the rest of the year.

A shopping list can help greatly. Stores that advertise low-priced, loss-leader items to attract customers hope you will buy enough other things to make up for the low-cost items. Great thought is given to getting you to buy higher mark-up items while you are in the store.

Displays stacked high, or put at the ends of aisles, or on special tables in the middle of aisles, or near the check-out counter may tempt you to buy items that were not on your list. Supermarket owners know that a store’s profitability depends on its success in stimulating such impulse buying. Leland J. Gordon and Stewart M. Lee say in Economics for Consumers: “The tendency of consumers to buy impulsively is exploited by sellers, to their advantage. Impulse buying increases when men do the shopping and soars when children are along. Aware of impulse purchase traps, the careful shopper buys what is on her shopping list, and nothing more.”

Other Ways to Save

Many grocery games are played with packaging, and with prepared foods. Once upon a time when you bought a pound of sugar, or a kilo of rice, these were weighed in front of you and you took them home. Now they come in packages, which can be deceptive. Some big boxes are far from full. A bottle of hand lotion was designed to look larger than a competitor’s bottle that held twice as much. A package may look as if you are getting more, when actually you are getting less.

A simple solution is to compare. Read the weight before you buy the package.

Prepared vegetables are sold in convenient packages, and cheeses in bite-sized pieces. But you pay​—sometimes more than you think—​for such convenience. Not only do prepared foods cost more; they may have less nutritional value than you expect. Fillers, extenders and even water have replaced some of the nutrients in prepared foods.

The rule is simple: The more special preparation that has gone into your food, the less you will probably get for your money.

How to Protect Yourself

The careful shopper takes this job seriously, and gets as much as possible for the money. On the preceding page is a checklist of basic points to remember in order to get more for what you spend.

Doing these things will not make prices go down, but your money will go farther when you are conscious of where it goes. And you will know that you did what you could to keep from paying more than was necessary.

[Box on page 14]

Shopper’s Checklist

□ Use a shopping list; avoid impulse buying.

□ Beware of unbelievably low, low, low prices.

□ Watch for seasonal sales.

□ When products are weighed in front of you, watch the scale.

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Religion and Your Money

People donate a lot of money to religious causes. In the United States such donations amount to about $18,000,000,000 a year.

Much of the money is no doubt used for the purpose intended. But is everyone pleased with the way their contributions to religious groups are used? In a letter to the “National Catholic Reporter” one man recently wrote: “Ever since I was a young teenager I have had complete faith and trust in these organizations.” But “now,” he continued, “my faith and trust have been shattered.”

This man was disillusioned by scandals involving donated funds. He mentioned Father Flanagan’s Boys Town. Also the Pallottine Fathers, who raised millions of dollars through massive mail appeals to help starving waifs in other lands. But the head of that monastic order had to plead guilty in court to “fraudulent misappropriation” of funds. The man also referred to the investigation of the Pauline Fathers for allegedly having squandered as much as $20 million on high living and bad real estate ventures.

Protestant evangelists use radio and television appeals to draw many millions of dollars yearly from home listeners. The evangelists may offer a free religious item of small value on the air. But “once you’ve written, your name is in his computer,” says “Presbyterian Survey” magazine, and you’ll be bombarded with letters asking for money.

A former Southern Baptist radio official explains that much of the money is used to buy more broadcast time to get more money to buy more broadcast time. And since the evangelists are “under continual scrutiny by [tax officials],” he says, they may “establish a university and make themselves president, [so] they can pay themselves large sums of money without IRS scrutiny.”

It is commendable when a person contributes his funds to help others. And certainly not every appeal is fraudulent. But clearly it is wise to think twice before contributing, even when the appeal is made in the name of religion.

[Picture on page 13]

“Mark the price up a bit, so next week we can mark it down for a quick sale.”