When to splurge and when to save

Posted at 08/26/14 11:13 AM

MANILA, Philippines - Like most consumers, you’ve probably asked yourself when it makes sense to go for high-priced products and services, and when it pays to go for the lowest priced options out there.

Let’s face it, not all your expenses can be decided on price alone. While buying the lowest priced brand is a good cost-saving strategy for many products, there are some products and services for which you shouldn’t be penny pinching. Most of the time, these are the products or services that you will be using for an extended period of time, or those that can confer you with life-long benefits.

On the other hand, non-essentials are stuff you can do without. In all likelihood, it won’t hurt you or your family if you scrimp on these. Your daily cafe latte fix, laundry detergent, plastic bags, gadgets and blings all fall under this category. There are also products and services that charge a premium because of their brand image and market positioning. These include luxury goods and other aspirational items such as cars, clothes, and accessories which you may want to have, but which you can actually scrimp on.

Most — but not all — of the time, price is a good indicator of quality. The higher price may reflect the better materials used in manufacturing a product, or the additional procedures that went into ensuring its quality.

Invariably, it all comes down to choice. Here’s our list of products that are worth splurging on and those that you can scrimp on.

Spend on:

1. Education

Good quality education in the Philippines does not come cheap. When choosing the right school for your children or yourself, do not let price be your sole guide. Although you obviously should not choose a school whose tuition is way beyond your budget, do not just go for the one that charges the lowest fees. Instead, find a school that offers the courses that are most appropriate for your child’s needs, within the range that you can afford.

2. Health

Do not compromise your health by going for the cheapest services out in the market. Do your homework by understanding your options and knowing what each one entails. Whenever you are being quoted prices that are much lower than what similar service providers give, investigate why this is so.

For instance, if you are going to get orthodontic braces and you get a wide range of quotations, find out what accounts for the difference in prices. It is possible that different materials or technologies are being used. Also try to find out if the person you are consulting is an expert in his or her field. Going back to the orthodontics example, you may find out that dentists who went through a five-year course in orthodontics are charging higher rates for their services than dentists who have only a months-long certificate course. Having said this, be on the lookout for ways to manage your health-related costs. When buying medications, generics are an affordable alternative to pricier medications. You may also look for medical centers and hospitals that charge lower rates for their services.

3. Safety

When your safety may be compromised, do not go for cheap solutions. During the holiday season, it is tempting to go for the low-priced Christmas lights being sold in sidewalks. However, many of these are not certified as safe and may cause fires. Extension cords and chargers are being sold in many markets and bazaars but not all of these have the required safety certifications.

4. Efficiency drivers

There are some products or services that may seem expensive, but actually make you more efficient and therefore allow you to accomplish more. If your work allows you to telecommute, upgrading the speed of your internet connection may add to your efficiency.

Scrimp on

1. Entertainment

Price does not dictate how much enjoyment you will draw from your entertainment activities. A high-priced ticket to a show or game, for example, does not guarantee that you will enjoy what you will watch. Similarly, going to an expensive restaurant does not guarantee that you will like or enjoy your meal. Your entertainment options are only limited by your creativity and imagination.

2. Clothing and fashion

There is no need to get the most expensive brands when shopping for clothing and other fashion accessories. It may be more practical to find something comfortable and durable. If you have young children who outgrow their clothes every few months, it makes more sense to buy low or mid priced clothes.

3. Anything that regularly goes on sale

Airlines offer many promotions throughout the year so try to find the lowest priced tickets for your purposes. Similarly, hotels and resorts offer big discounts especially during off-peak seasons. Buying clothes? The best time is during end of season sales, especially for a tropical country like the Philippines where we do not observe seasonal wardrobes.

4. Commodities

When buying most food and household items of comparable quality from groceries, it won’t hurt to choose for the lower-priced variants. Often, these are made by large firms that are able to enjoy the advantages of having an efficient operation.

Grow Your Money is an editorial partnership between ABS-CBNnews.com and Citi Philippines to promote financial education and provide helpful information to Filipinos on how to better manage their personal finances.

Visit www.citibank.com.ph for more information.