In general, people want to make financially responsible decisions when they go shopping. Often times, I look at two apparently identical items that priced differently. On some occasions, the difference between two products is as obvious as the price. The question is: should you buy the cheaper item or the more expensive one? Do you purchase entry level items or upgraded ones?

In the long run I believe you will be better off purchasing the entry level item until you prove to yourself that you will (1) use the product and (2) take advantage of the additional features of the upgraded product. While this approach means that you may spend more for some products, it also means you will spend less overall in the long run.

Here are a few examples

EXAMPLE #1: The Treadmill

Let’s say you are on the market for a new piece of exercise equipment. Before you start thinking about dropping $1,500 on a treadmill, may I suggest an alternative. First, make a commitment to walking for 10 minutes every day. If weather is an issue, visit your local consignment store and see if they have an indoor exercise machine available. It’s likely that the machine will not look anything like the one you had your eyes on, but buy it and use the following plan:

• Set an exercise goal — for example, exercise for 20 minutes, five days a week.
• Plan to keep your routine on the used machine for three months.
• If you use the machine consistently then you can consider upgrading to a new one because you have proven you will get full use out of the upgrade.

Implications: You may have used a less than ideal machine for three months, and in the long run you may spend an extra $100. But, you have proven you will use a new machine. Moreover, there is a possibility that you will be content just using the original used machine.

Do you have any idea how many thousands of dollars of unused exercise equipment are rusting away in peoples homes? Don’t be the next victim. Start at the entry level, then upgrade later.

EXAMPLE #2: Groceries

Standing in the grocery store you see a store brand of Macaroni and Cheese. Your family has always purchased Kraft, but there is a reasonable difference in price. What should you do? Buy the cheaper product. If your family does not like it, then simply go back to your brand of choice. If, however, your family likes the cheaper product, you have now found a way to indefinitely save on your groceries.

Don’t ignore a certain item just because it is not a brand you recognize. Try it and be the judge for yourself. There will be some brands you like much better, and some you equally like with the cheaper product. In the long run this will result in cost savings. Perhaps you could set up an at home blind taste test to get started, and here are some more tips for saving money on your groceries.

EXAMPLE #3: Electronics

A few years ago I was hunting for my first MP3 player. There was a substantial price difference between an iPod and an MP3 player I was considering. I decided to buy the non-iPod one for $20. Why? I wanted to be sure I would actually use it when I went jogging. It turned out that I was perfectly content with a simpler (cheaper?) brand, and did not have to pay $100+ for an iPod.

This same principle can be applied to any kind of electronic items (with the possible exception of big ticket items). Try a more basic entry level product first and upgrade if you need the features or encounter problems.

EXAMPLE #4: Clothing

I live in a climate and environment where I get a lot of use out of high performance active wear. I spend a lot of time in rustic conditions so I get use out of dry fit clothing and high quality outdoor gear. Nevertheless, when I first came to Papua New Guinea I only bought one pair of Columbia GRT pants. I found that they held up well under the conditions and the features were awesome for my trips to the outside villages. The subsequent trip to North America, I purchased more of this expensive clothing. What if, on the other hand, I had bought a whole wardrobe to start with and did not like the clothing? I would have wasted a ton of money.

When shopping for most products I recommend that you start with an entry level product and upgrade once you have proven to yourself that you will use the products, and you know the additional features are worth the added expense. While some might think the approach is “cheap, not frugal,” I believe you will save money in the long run if you use this approach (with some common sense).

Special Note

This approach does not apply to everything. For example, you might want to pay more for a vehicle or high priced electronic item otherwise you might just be wasting your initial purchase.

Do you ever purchase products this way – buying entry level first? Has it saved you money?

What types of items do you think are always worth the upgrade?

Photo by jpockele.