The money lesson I wish I had learned when I was young

It sounds counterintuitive, but it’s true—a sale does not always save you money.

Last month, my 10-year-old son Adam and I made a short video (see above) to coincide with Talk With Our Kids About Money Day. In it, we discussed a hodgepodge of financial issues, including weekly allowances, needs and wants, fun money and role models. One particular question, however, has stayed with me. Adam asked me what I know now about money that I wished I had learned when I was a kid like him.

Honestly, I could have spent hours answering this one question. Like everyone, I have made (and still make) mistakes and, hopefully, manage to learn from my experiences. But there is one significant money-related lesson that took me far too long to learn, and I wish I had figured it out much sooner:

A sale does not necessarily save you money.

How can this be? Isn’t it a money-maven’s mantra that you should never pay full price for anything?  

Let’s look at an example. A $50 pair of jeans is marked down a ridiculous 60 per cent and is now on sale for $20. That’s a savings of $30, right? Yes, but if you already have multiple pairs of jeans at home that are in perfectly good condition then you aren’t really saving $30. Instead, you’re out of pocket $20 that you wouldn’t otherwise be spending.

If you were planning to buy a new pair of jeans because your old ones are worn out or styles have changed, then you may be saving some money on that purchase. But are you saving $30? That’s hard to say, because retailers artificially mark up their merchandise for the very purpose of being able to offer a discount.

The reason behind this pricing strategy is simple and explains why, even to this day, I get a thrill when I see a red “sale” sign. As writer Mark Ellwood explains in his book Bargain Fever, humans are chemically programmed to react to sales. When we’re offered a discount, it triggers the brain’s dopamine response and makes us feel good. Plus, shoppers “want to feel like they’ve gotten one over on the store,” Ellwood told CBS News.

It’s truewe’ve all experienced that feeling of victory when we’ve snagged a fantastic bargain. And, don’t get me wrong, buying things on sale can save you a bundle. But only if you stick to items you need or were budgeting for anywayand you’re an educated shopper who knows a true discount from a false markup and markdown. Otherwise, all you’ve done is spent your hard-earned cash on a cheap thrill.

If only I could go back in time and explain this to my younger self.

Keep the conversation going

What do you now know about money that you wish you had learned when you were young?


The views and opinions expressed in this article are those of the author and do not necessarily reflect that of CPA Canada.

About the Author

Tamar Satov

Managing Editor, CPA magazine
Tamar is a journalist specializing in business, parenting and personal finance. She blogs regularly in this space with advice and anecdotes on her efforts to raise a money-smart kid.