Everybody Plays the Fool
We have all been there before, sometimes we realize it immediately, sometimes it takes a few weeks, and sometimes it takes years, but we come to the realization that despite the fact that we are highly intelligent people, we had been “fooled” into spending our money. It is a painful realization to come to; however, if you learn from the error of your ways and commit to never being fooled again, then you ultimately won the battle. Here are some ways that I believe people are fooled into spending money.
1) Buying insurance on electronic products
I worked for most of my college life at a large electronic supply chain, and even though the store did not employ commissioned sales people, they all had goals around insurance plans sold. One day I asked my boss about the aggressive efforts around selling the extended insurance plans and he said simply, “We make a ton of money on those.” And let me just make clear that I do not have an issue with companies making money; however, I do have an issue when it is a calculated bet against your consumer. The insurance plans sold on electronics have all been carefully vetted and valued by hundreds of actuaries at insurance companies who understand the likelihood of “issues” occurring with the products. Most electronics break down within the first few months due to manufacturer errors and those issues are covered by the manufacturer. If you bought insurance, your insurance provider will provide you the replacement and then they will get reimbursed by the manufacturer directly. The “lifetime” of the product is typically 3-5 years, and then these products will usually breakdown right after the insurance timeframe ends. I hope you don’t think this is a coincidence.
2) Playing the slots in casinos
In my former life, I attended a conference and heard a presentation by the Treasurer of a large hotel and casino chain talk about the cash flow of the company. He stated that the company would typically lose money on the tables; however, they consistently made money on the slots. After hearing this, I refused to put a single quarter in a slot machine since. And it makes sense. Casinos have the ability to control the pay out returns on their slot machines. In addition, they give you “free” drinks to keep you in the slot machines thinking that you are coming out ahead by just sitting there. So the next time you sit at a slot machine, you should only think about “investing” as much or less than the cost of a drink or two because that is pretty much the only value you are getting.
3) Paying for expensive pet food
One of my former clients in my previous life was a catfish farmer, and I experienced the joy of getting a personal walk-through of the process of raising catfish from beginning to end (all while wearing a suit and heels), and one of the things that amazed me was how the company used every last part of the fish when selling it. They shared that the larger pieces of meat that were left after the fish were cut up were sold to the “expensive” pet food companies and the smaller pieces were sent to the “lower” end pet food companies. What struck me about this was that it all came from the same fish, and it was a small component of what was used in making the pet food. I understand the desire to get your pets the “good stuff.” Believe me, here is my cat, and I am definitely tempted to spoil him, but unless the vet tells you that you need to utilize a special diet for your pets, they will be just fine eating the “lower” end foods and you can save yourself hundreds of dollars a year.
4) Expensive shampoos
I have absolutely been a fool over this “scam.” This may surprise some of you, but I have not been a “natural” blonde for the last 15 years, and coloring my hair is the largest personal care expense that I make every few months. Because I invest so much in the coloring, I was convinced that I needed to “protect” my color with the expensive shampoo my hair stylist told me that I had to use. Then a few years ago I started to experiment with using less expensive shampoos, and the amazing result of the experiment was that my hair looked exactly the same as when I used the expensive shampoo and my hair dresser never noticed the difference.
5) Clothing for children
Just like with pets, spending money on children is another “highly emotional” area, and it is easy to get sucked into spending money on their clothes because we want them to look nice and we want others to think that we take care in dressing them. I used to say that I never wanted people to think that I dressed my kid like a “Kmart kid.” The reality, though, is when they are babies, they grow so fast and end up releasing all sorts of bodily discharges into their clothes, that it doesn’t make sense to spend much money on them. Then the older they get, the more they have a “say” in how they get dressed, and my son actually likes looking like a “Kmart kid” when he goes to school, so I stopped caring what other people thought. And even though I live in a nice neighborhood in suburban New York, I love that when class pictures come home, just about every kid in the class looks like a “Kmart kid.”
*Image Source Flickr
When have you been fooled into spending money? Or what money “weaknesses” do you have that make you feel like a fool for indulging in them?