Is being frugal worth your time and effort? Can the law of supply and demand work in your favor to earn additional savings on your everyday purchases? Did you know that you actually hurting the US economy by saving your pennies and being too frugal?
You may be surprised to find out how you can save money when you approach think about frugality like an economist. Here are a few lessons from your economics class and how you can apply them to your frugal life.
Toilet Paper Is Worth More Today Than Tomorrow
If you won the lottery, would you want the lump sum payment today or would you want to spread your winnings out over 20 or 30 years? Thanks to our friend, inflation, you would be better off financially by taking the lump sum payment up front today. A dollar today is always worth more than a dollar in the future because of the effect of the time value of money and inflation.
These same economic theories can be applied to frugality and saving money on everyday purchases as well. When you stockpile toilet paper by the case after finding a good deal at the grocery store or discount warehouse chain, you are not only incrementally saving money on each item’s cost by buying in bulk. You are also saving money by not paying higher cost of the products later due to inflation as well.