Hey everyone, it’s Finance Fridays again. Today we’re going to talk about the constant battle of “Buy the Best” versus “Buy Cheap”.
“Buy the Best” versus “Buy Cheap”?
Yea. I think this is a constant battle that occurs in everyone’s mind whenever we’re at the store. There are conflicting ideals at work here:
When you “Buy the Best” you are saying that buying the more expensive (possibly better) item that will provide better value long term than the cheaper variation “Buy Cheap”. This is sometimes true and sometimes not. Now, of course, as a physician, you probably don’t necessarily need to do this. However, I still think it’s good to break down the reasons why I do it.
It’s not as simple as “Buy the Best” versus “Buy Cheap”. Everytime you evaluate an item is a case by case analysis. For example:
When my daughter Kylie was born we needed to buy baby stuff, which is of course, very expensive. I think the general approach here is that when it comes to a new baby, the wallets and credit cards come out and people make it rain. However, I don’t think that is necessary for all baby items. For certain things, such as a stroller and car seat, I researched pretty extensively to find a combination of form/function with the highest regard to safety. That was the single most important factor to me.
For those interested, I decided on:
and later on
The thought process for this was that the BAgile/BSafe system was used for when Kylie was an infant and we needed to get her into and out of the car easily. We transitioned to the larger Britax Advocate later on for safety. Getting a tiny infant into the bulky Britax Advocate was too difficult. When Lucas was born we used the BAgile/BSafe for him and Britax Advocate for Kylie. Now we have a total of 4 Britax Advocates, 2 in each car.
As you can see, these are very expensive. However, after doing my research, I felt that these were the best combination of form/function with regards to safety and therefore was willing to pay for that.
Let’s contrast that against something else: Baby clothes
Now, everyone loves baby clothes. Dressing up your new baby in the cutest possible clothes is great. However, I must remind you that everyone loves dressing up the new baby. You will literally get a ton of clothes from everyone in your family dressing up the new baby. Then if you add in your own clothes buying, then you will get to the point where your baby will wear a new outfit everyday, and not be able to wear it again before they grow out of it.
This is probably ok if you’re planning to have more kids and they can get some hand-me-downs. However, for me, I have one daughter and one son. Both of my children ran into the same problem of having more clothes than they can possibly wear. Of course, I donated their clothes to friends/family who had new babies, but I’m just saying — some of those clothes were brand new and never even been worn. As such, I would really advise people to try to curb buying too much baby clothes. Then, we go to the other elephant in the room, “Buy the Best” versus “Buy Cheap”?
I don’t really see any reason for your baby to wear ultra high end brand name clothing.
Babies are babies. They will spit up, slobber, and throw up on all the clothes you put on them. In general, I don’t think it’s a great idea to buy all your baby clothes from a high end store. Of course, if you want to buy a few more expensive items for a baby photo op, or a special trip somewhere or something, of course that’s fine. However, in general, you can find lots of great baby clothes from just about anywhere. I think that Carter’s and Garanimals have very cute baby clothes which can be had for reasonable prices — and these are found at Walmart or Amazon. When you “buy cheap”, it doesn’t necessarily mean it’s not quality. It will certainly last long enough for the baby to wear a few times, and the likelihood is that they’ll grow out of it before it wears out anyways. Just remember, your kid is what makes the outfit cute, not the other way around.
Here are some examples:
So, in the two examples above, for me, I would “buy the best” when it comes to safety (car seat/stroller). The reason for this is because this falls into the “failure is not an option”. If we were to ever get into a car accident, I want to be sure that my kids are as safe as possible. I’ve taken great care with buying these car seats, made sure I installed them correctly, and have them checked.
However, when it comes to baby clothes, in general, the likelihood is some of the clothes will get ruined just because babies are babies. So, in general, I think “Buy Cheap” (but good) is ok here.
Interesting, anything else?
Sure. But before I continue just remember that these are my own internal values, yours may be different.
Brand Name versus Generic
My kids like cereal — in fact, for some reason they really like Lucky Charms. I don’t really know why since I’m partial to Fruity Pebbles myself. However, they can’t tell the difference between the Lucky Charms brand name and the “Lucky Stars” generic that the store sells. In fact, they don’t even really see the box since when we get home we dump them into this hand containers which kind of look like this:
So, if you can’t tell the difference and one is cheaper than the other, then just buy the cheaper one. That’s kind of a no brainer isn’t it?
However, on the flip side, there are things for which the generic doesn’t work. For example, when it comes to certain medications, for some patients that generic just simply doesn’t work as well as the brand name. There is significant complexity to the human body and perhaps the active ingredient or the way its created in the generic just isn’t quite the same. Nonetheless, if it doesn’t work then you have no choice but to go with the brand name. Another thing would be like my wife and her Starbucks. She’s tried lots of other coffees, but none of them will do. In contrast, I’m able to do ok on my coffee I make at work now.
The other thing is sometimes cheaper is better. My daughter has a ton of Barbies. However, she has just as much fun with the generic dolls that she chooses from the store over any brand name Barbie she receives. I think there is an inherent joy and feeling of ownership in choosing what you want. The same goes for my son and his trucks and cars and figurines. His favorite toy came from a McDonald’s happy meal. It keeps breaking, but we keep managing to put it back together.
Does this really matter?
Like I said, for the majority of physicians this probably won’t make a huge difference in how they spend their money. However, this is just a start. Like compound interest, small steps can add up. Maybe you decide you don’t need to lease your expensive car anymore or you can cancel some other things you don’t need. Saving can be addictive (in a good way). You’ll be surprised by all the things you can give up that you don’t need — and don’t really care about.
Every dollar you save starts from somewhere. It teaches you the evaluate and re-evaluate the value of a dollar on a consistent basis. Also, it may help teach your children to understand to evaluate their purchases as well. They will imitate what you do, so maybe teaching them to make this case by case analysis at an early age will help them later on. At least, I hope it will rub off on my children a little. They need to understand the money to buy them things has to come from somewhere — and not just from daddy’s “magical” credit card.
Buy the Best or Buy Cheap — the constant struggle.
Just remember that this decision is not an all-in-one answer, it’s a case by case analysis.
I’ve outlined some of the more common ones above and how I see them.
The likelihood is that for most physicians this won’t make a difference financially. However, like compound interest, small steps can add up.
Saving can be addictive (in a good way).
You’ll be surprised by all the things you can give up that you don’t need — and don’t really care about.
Agree? Disagree? Questions, Comments and Suggestions are welcome.
You don’t need to fill out your email address, just write your name or nickname.
Like these posts? Make sure to subscribe to get email alerts!