January 23, 2013
by Lila Quintiliani, AFC®
Military Saves Assistant Coordinator
Communication & Outreach
In the behavioral economics book Predictably Irrational, Duke University professor Dan Ariely speaks of the power of “FREE!” Through experiments and studies, he discovered that the notion of FREE! is so persuasive that people may be tempted to buy things they normally wouldn’t, just because they are getting something FREE!
We’ve all experienced this to one degree or another: many times when you sign up for cable service, the cable company will offer you a higher tier package with additional premium channels for FREE for a limited time. If you accept, you run the risk that you might forget to cancel the additional services and end up getting charged more. And if you were initially only interested in a lower tier of programming, you may not even use the channels you got for FREE.
Or perhaps you are at the store and you see two packages of socks. One is your usual brand, the other is a less desirable brand, but it has an additional pair of socks for FREE. You are strangely tempted to buy the brand with the FREE goodie, even though it is not a brand you like.
In both cases, FREE! wasn’t really FREE. That’s because retailers know how to manipulate consumers. (How many times have you added something to your online shopping cart just to qualify for FREE shipping?) So the best defense is to be a thoughtful shopper.
Don’t buy unless you really need something. Just because something is a good deal doesn’t mean you should get it. Assess whether you really need that item.
If you do need to buy, be aware of retailer tricks to get you to buy more. Free shipping isn’t a good deal if you are adding $15 worth of extra goods to your order to qualify for it. Buy one, get one free offers aren’t beneficial if you only need one of something. Coupons are awesome, but only if you actually need that item.
Keep track. If you are given a service FREE as part of an introductory offer, make sure you note on your calendar when that offer will expire.
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