Is it just me, or is it impossible to get out of Costco without dropping $200? It’s enough to make you wonder whether the bulk you’re buying is really saving money.
Some online research, combined with my own experience, has led me to this conclusion: Warehouse clubs like Costco (http://www.costco.com/) and Sam’s Club (http://www.samsclub.com/sams/homepage.jsp) can be a valuable tool in your cost-cutting strategy, but they’re not always the best option. And they can be downright dangerous.
Just because you can save 30 percent on paper towels doesn’t mean the same pricing model applies to that 60-inch HDTV that caught your eye when you walked in. But it’s easy to make the assumption.
Like anything else, you’ve got to be smart and do your homework (http://money.usnews.com/money/blogs/my-money/2013/08/28/6-costly-mistakes-to-avoid-when-shopping-at-warehouse-clubs). Here’s what I’ve learned and/or found out:
Don’t assume a great deal. When you can buy an 8-can pack of Progresso soup for $12.75, as opposed to $2 per can at the grocery store, or two 500-count Ibuprofen tablets for $10, the savings are obvious, right? Some warehouse-only sizes make it difficult to do the math. Make sure you compare the price per serving, ounce or whatever to what you can find on sale at the grocery store. And here’s a dirty little secret: Big-ticket items can often be found for lower prices elsewhere.
Don’t buy perishables in bulk. It’s oh so tempting to purchase an entire flat of ripe strawberries for $12 vs. $3.50 for only one pint, or a giant box of organic lettuce for a couple bucks more than a small bag of the same stuff at the grocery store. Unless you can finish it or freeze it before it goes bad, don’t buy it. And, again, compare the price per pound to what your grocery store sells.
Make a list. You shouldn’t go grocery shopping on an empty stomach, nor should you hit the club stores without a list. It’s too easy to be seduced by the stimuli. You’re going to see great deals. That’s a given. But unless you truly need something, you can “save” yourself into debt. Stick to your list of staples.
Make sure it’s worth it. It costs $40 to $50 annually for the privilege of giving your money to these stores. To make it worth the price of admission, you’ll need to shop there often and buy items that are cheaper than what you’d spend anywhere else. Premium memberships? These usually offer something like 2 percent cash back on your purchases, if you pay the upgraded membership fee (usually another $40 to $50). Keep in mind that you’ll have to spend an additional $2,500 per year just to get your $50 back.
Split it up. Unless you have a huge family (I don’t), it can be difficult to justify a warehouse-size bulk purchase. Get a friend or family member to split the membership fee and that box of 100 granola bars. It’s a great way to reap the rewards but avoid the hidden costs of club shopping.
I am positive if you follow these tips and set your budget before going into a warehouse store, you can make these stores work for you. And while you are in the store remember, if you don’t need it, don’t buy it! No deal is worth breaking a budget.
Kat's Money Corner is posted on Dollars & Sense every Tuesday. Kat Hnatyshyn, when not blogging or caring for her little one, is a manager with CommunityAmerica Credit Union. For more financial chatter, click http://twitter.com/savinmavens.