Technology has changed the platforms on which our purchases can take place. While once you had to get dressed and drive to a store to buy the latest gadget, you now can shop in the middle of the night wearing whatever is appropriate at that hour, never facing another, "No Shoes, No Shirt, No Service" sign. (Shopping from the comfort of your couch has major benefits - and some unpleasant side effects. Check out Shopping Online: Convenience, Bargains And A Few Scams.)
TUTORIAL: Budgeting Basics
While this convenience saves us time and energy, is it really saving us money too - or does technology actually create more spending with less financial forethought?
1. Automatic Renewals
When you buy certain services online or even through your video game systems, you may be signing up for automatic renewals of the service. Sometimes, these auto renewal fees are low enough that you don't even notice them sneaking through each month or year on your credit card or bank statement, but they add up even as they remain unused by many who have them.
2. One-Click Payments
It seems like every online retailer wants to keep your credit card information on file so that they can set you up with a one-click button for making future purchases. The reason why is simple: you will be more likely to spend if you don't have to run and get your credit card and enter the numbers in every time you see something you want to buy. One-click purchasing systems definitely make buying easier but sometimes, that's a bad thing - especially if you have issues with discipline and like to indulge yourself when stressed.
3. The Lack of Accountability
Intangible, electronic goods like MP3s and e-books are becoming more mainstream. Often, they are also inexpensively priced. Throwing $0.99 at a book or song here and there seems like nothing, but these purchases can really add up. And some consumers, who have cut ties with their cable companies, are now spending even more on streaming video and monthly rentals than they were on cable. It's easy to overspend your allotted discretionary entertainment budget on these types of items.
4. Easy Access to Purchasable Goods
If you wanted ice cream right this very second but you had none at home, then you would have to drive somewhere to get it. This need to go out and gather what you crave will stop many of us from indulging in every whim. But items that can be purchased online are easy to indulge in since there are absolutely no barriers to purchase.
5. Shipping Costs
In some cases, buying online not only makes a purchase more convenient but it also saves money and travel expenses if the item isn't available in the area near your home. But when you buy goods that you could easily pick up at local stores, you will pay shipping and handling fees that could have been avoided. The more often you make these purchases, the more needless shipping and handling fees you will pay, wasting away substantial dollars you could actually use to pay down debt or increase savings.
6. Monthly Discount Plans
Many online retailers have monthly subscription plans that offer their subscribers discounts on purchases and shipping through membership in the discount plan. If you purchase a lot of items from one retailer, these discount plans could save you money over the long-haul, but you need to be very careful to always contrast the cost of the membership with the savings. Additionally, make sure you aren't buying more than you need just to take advantage of the discount. It's only really a savings if the deal doesn't compel you to spend more than you need to. (E-tailing has changed the way consumers do nearly everything. Do you know how to pick the best retailer? See Choosing The Winners In The Click-And-Mortar Game.)
The Bottom Line
Technology has an important place in our lives that isn't likely to lessen over the years. Getting a grip on our electronic spending now may be a vital step in ensuring that we retain control well into the future.