If you watch television for any length of time, you’ll be bombarded with commercials advertising everything from car insurance to mouthwash to home security systems. Most of the commercials use the same tactic – fear.
One such commercial reminds you that paying a little extra money for car insurance could be the only thing that protects you from “mayhem,” or unforeseen circumstances. Mouthwash commercials remind you that your mouth is FULL of nasty germs of which you must rid yourself. Even food advertisements imply that you should be fearful – of eating too much, not eating enough to be “satisfied,” or of serving a meal that your family won’t like. However, the advertisements then remind you that you can quickly set your mind at ease by buying their products, which may cost a little more than other brands, but… isn’t peace of mind worth a little extra money?
The main problem with ads like this is that they play on irrational or created fears. The car insurance commercial, for example, plays on our fear of the unknown – you never know when you car will be smashed by a tree that falls during a wind storm, or by an emotional teenager who’s not paying attention, or by your own distracted driving. The unexpected can happen at any time, so you’d better be prepared. And to a certain degree, they’re right, being prepared is important. But “being prepared” doesn’t necessarily mean buying their products.
If you’re truly concerned about unexpected damage being done to your car, prepare for it, not by paying for more insurance coverage, but by keeping a certain amount of money set aside for those types of emergencies. In the long run, higher insurance premiums will cost you more than the $1,500 or $2,000 you have to keep in an emergency fund.
Here’s an example:
Let’s say you have a 2009 Ford Escape XLT, you drive 10,000 to 15,000 miles per year, and you’ve had no major accidents or violations in the last three years. If you have the minimum required bodily injury and property damage limits, collision coverage and a $500 deductible, your monthly premium will be about $150.00. Now, if you increase your deductible to $2,000 and pay your six-month premium all at once, you’ll save a little over $200 per year. If, in addition, you choose limited collision coverage, you’ll save a total of $250 per year.
If you’re thinking “A $250 savings isn’t that much,” you’re right. It won’t tip the scales on your retirement or college savings. But this is just one example. Homeowners insurance can offer similar savings. Smaller-ticket items can add up quickly as well. Anti-bacterial soap is a good example. It’s usually more expensive than regular soap, but it is really necessary? Soap, by definition, cleans our skin and kills bacteria. A generic, non-anti-bacterial soap may not kill as many germs, but that doesn’t mean you or your family are more likely to get sick. In fact, some health professionals think anti-bacterial soap works to our detriment. Our bodies need to be exposed to a certain amount of germs in order for our immune systems to get and stay strong. Similar things can be said about mouthwash, toothpaste and body wash.
The health and beauty industry is another one that excels at manipulating people to buy out of fear. But guess what? Everyone’s getting older. Everyone. The skinny, perfect-skinned teenager is getting older, just like my wrinkly and charming 85-year-old grandmother is getting older. But the health and beauty industry has convinced us that we need to fight this inevitable and universal process with every thing (read: “every penny”) we’ve got. Though we’re all getting older, we shouldn’t get wrinkles or gray hair. It used to be that “growing old gracefully” referred to men and women who appreciated their aging bodies, stayed as active as they could, and enjoyed the wisdom and self-confidence that only comes with age. Now, it means that we’re loading up our skin and hair with every soap, cream and mask we can find that promises to keep the 40-year-old looking 20, and 60-year-old looking 40. If everyone’s getting older, why do we spend so much money trying to look like we’re not?
Take some time to consider how many products you by out of fear. If you’re feeling especially brave, make a list of them. Then, one by one, go through your list and think carefully about how much you really do (or don’t) need that product or service. If you’re concerned about germs, freak auto accidents or crime, do some research. Find out the likelihood of you’re being exposed to a deadly germ, or how at risk you are for having your house broken into. Some expenditures may make sense for you. If, for example, you live in an area with an unusually high crime rate, a home security system makes perfect sense. If, however, you live in a place with low crime, the security system may not be necessary.
Taking the time to logically think through how and why you spend your money could result in spending adjustments that add up to hundreds or thousands of dollars per year. And over the course of your lifetime, that can add up to a LOT of money!
For more tips and tools to help you better manage your money, visit Quizzle.com, where you can get a personalized Debt Payoff Plan so you can become debt-free sooner and save potentially thousands of dollars in interest. And check out these other great, money-saving articles:
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- 5 Personal Finance Lessons from the Rolling Stones
