BLACK FRIDAY

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Photo by Jay Clark on Unsplash

I am a strong consumer in the eyes of the government and many economists. Regardless of my purse, I continue to buy, purchase and consume. It’s what our society is built on. Consumerism.

I developed a habit a few years ago of buying things when they go on sale to save money. Now, I feel like I have been fooled this entire time. Why?

Look at the sales. Over the past several years, I have noticed that sales start sooner and last longer. Boxing Day tuned into Boxing Week. Black Friday turned into Black Friday Week, followed by Cyber Monday.

I started seeing Pre-Boxing Day Sales promoted by some retailers starting Dec 1st…

“The book cover says best-selling, not best-written.”

There are many reasons for this, but it wasn’t until recently that I thought of one in particular. Psychology.

Some of the largest corporations are experts in marketing. Sometimes, it’s not about who makes the best product but who can pull in the most sales. Sales don’t mean best written or best manufactured.

Robert Kiyosaki said it best in Rich Dad Poor Dad. “The book cover says best-selling, not best-written.”

Retailers know that people love the idea of saving money. When they see things on sale, they don’t think about how much they are spending but how much they are saving. Retailers know this and are pushing this harder than ever.

Spending $1000 to save $300 is terrible financial advice

I bought clothes, electronics and consumables when they went on sale. Even if I didn’t need them, I knew I would use them, so I purchased them anyways, thinking I might as well I will use them eventually.

I recently learned something that is hard for me to accept. Spending $1000 to save $300 is terrible financial advice.

I work in Project Management, and there is something called Sunk Costs. A sunk cost is a cost spent on a project that cannot be recovered. Projects are sometimes cancelled, and the costs to date are classified as sunk costs.

For example. You are building a $900M pipeline across muskeg terrain, and upon finishing the geotechnical testing, you realize the project will cost 30% more than initially planned. Geotech and Engineering costs to date are north of $50M.

You decide to cancel the project because you cannot get additional funding of $270M (30% of $900M). The $50M is considered a sunk cost. It doesn’t make sense to spend another $1.12Bn to finish the project just because you incurred $50M in costs.

This is project management 101, and many organizations, especially municipalities, get this wrong. There is nothing wrong with spending money to learn lessons as long as you learn the lesson early enough.

Back to Black Friday and spending money.

Should you buy that new laptop because it’s 30% off?

This is relevant because the same rules can be applied. Should you buy that new laptop just because it’s 30% off? You know you will use it next year and think buying it now will save you money. The answer is NO! DO NOT BUY IT.

Humans are bad enough as it is with accumulating things they don’t need. If people start buying stuff in anticipation of using them someday, they will need two houses instead of one.

I like to think my generation (1st gen Millennial) will be the first that turns the tide for big retailers. Now that housing is entirely out of reach, and likely indefinitely, people won’t have the space to put all the junk they buy from Marshalls, Target, Michaels, IKEA, etc.

Something has to give. I refer to the best documentary about progress called Surviving Progress. It’s about the effects of being stuck in the 4th or 5th industrial revolution and its impacts on humans and the earth.

Eventually, we will need to scale back production and evolve our monetary system. Producing more at lower costs will only work for so long.

So, if you’re in the market for something specific, buy it! If not, don't look at the sales and save yourself some money by keeping the money in your wallet.

Best of luck, folks!

T