This Week in Your Wallet: Holiday Savings Edition
Wondering why the holiday season seems to be inching up on Halloween?
According to a holiday shopping forecast from ShopperTrak, spending this season is expected to rise – but only by 2.4%. That set retailers, who want to make sure that they get their piece of the Christmas pie, on edge. And as a result they’re piling on the marketing gimmicks to insure that at least some of your spending will happen with them. How can you arm yourself to resist? With information, of course. Knowing how marketers are working their way into your good graces will help you separate the really good deals from the so-so. Specifically:
Watch the price disparities. Research has shown that we’re more likely to go for a bargain if we can see the savings. That’s why stores will show you the original price next to the marked down one and why you tend to see savings in percentages rather than dollars. They make the bargains look bigger. Problem is, some stores mark things up just so they can mark them down. Try to get a sense of how much things routinely go for before you pounce.
Be wary of limited time offers. Snagging a great deal makes us feel as if we’ve gotten a trophy. Snagging one that other people miss because they didn’t get there in time makes us feel particularly smart. Marketers know this. The whole flash sale phenomenon is built on this premise. Try to assess if you actually want the item (is it on your list?) or if you simply want the win.
Understand the allure of paying with credit. When you’re not paying with real money — and credit isn’t real money today, it’s money you have to come up with tomorrow — the shopping process isn’t as painful. That’s why those buy-now-pay-later campaigns are so successful. Be careful. Paying with credit (unless you pay off the purchase that month) means it will cost you more, not less.
And now, the other news of the week.
We’ve lost faith, again:
How do you feel about our country’s economy now that the government is back at work after it’s 16 day shutdown? If you’re like many consumers, not so hot, The Wall Street Journal reports on the results of Gallup’s Consumer Confidence Index. We were rolling right along — in fact, the Index, measured daily, hit a five year high at the end of May — but it plunged when the government shut down and continued to fall as the saga dragged on.
This, of course, is good for precisely no one. When consumers lose confidence, we stop spending. Businesses see our retreat and stop hiring and investing in their futures. Which drives consumer spending (not to mention consumer confidence) down even further. It’s a vicious cycle that doesn’t bode well for the economy. On the topic of jobs, the September jobs report (delayed due to, yes, the shutdown) was finally released last week. Job growth rose less quickly than expected, with 148,000 positions added to the tally. That was enough to nudge the unemployment rate down a tenth of a percentage point from 7.3% to 7.2%. What it means, however, is a little foggy precisely because the data was so slow in coming.
The Non-Retirement Retirement
How long do you think you’ll continue to work? New research from Wells Fargo out last week showed that 37 percent of middle class Americans plan on working until they’re either too sick to continue or until they die. In other words, for them retirement is a non-starter. You can see why in the data as well. An even greater number — 42 percent — of the people surveyed think it’s impossible to pay the bills and save money at the same time. In fact, for many middle class Americans (59% to be specific), the most pressing financial concern on a daily basis is paying the monthly bills. That’s a larger number living paycheck-to-paycheck than has turned up in other surveys.
I’ve got to tell you, research like this worries me. Not because I’m chomping at the bit to retire (I’m one of those people who aren’t sure exactly what I’d do every day if I didn’t have work), but because other data tells me that planning to work until you simply can’t is not a smart financial strategy. Even if your health holds up, your job may not. Already a good chunk of those people who want to work in retirement find they’re unable because either the job isn’t there or their health starts to go.
So, what do you do? If you’re not saving for retirement now — at all — you have to find some way to start. Even a small contribution into a 401(k) or IRA assures you a greater future tomorrow than you would have had otherwise. Make it automatic so you don’t have to pull the trigger again and again. I know it’s hard when the monthly bills are pressure enough, but I have yet to see a budget where I couldn’t find some money to save — it’s there in the dinners out, the data in your cell phone plan, the one degree you could lower the thermostat. You just have to look for it.
A not so sweet surprise:
Happy early Halloween! It’s this Thursday, and if you’re like me, running out the door now to pick-up last minute candy and chocolate for this week’s army of trick-or-treaters, then let me warn you: chocolates might be more expensive. As CNNMoney reports, a growing demand in emerging markets, coupled with poor weather where our beloved cocoa is grown, has resulted in a hike in chocolate prices. In fact, the production cost of a milk chocolate bar has gone up 25% in the last year. Those prices have yet to make their way to consumers, but on the chance that they will I’m laying in an extra stash of Hershey’s bars for the winter.
Have a great week,
Jean
