For the past few years, I have been a regular thrift shopper. In addition to simple hobbies, I must also admit that thrift shopping is a bit obsessed for me as it brings out the inner treasure hunter in me, and provides endless sources of entertainment. In addition to saving my thousands of dollars over the years, it has also helped me in learning some important financial principles. These are the seven money lessons that I learned from thrift shopping:
Retail markups can be massive
The retail price of ordinary goods is so high that sometimes it feels like a waste of money and nothing else. Between wholesale and retail, the markup of glasses is 1000%, jeans are 350%, and furniture is 400%. Although I don’t hate anyone for making substantial profits, the only thing is that I don’t want to be the one who pays for it. Thrift shopping can minimize the chance of excessive price increases and help me maximize my budget.
Depreciation is a powerful force
Depreciation refers to the decrease in value of an item over time, usually due to wear and tear. However, depreciation can occur without any wear and tear. Selling this brand new car after driving for some time, and it immediately becomes a used car where the price then is reduced by about 25%. At some point, the downward force of depreciation has become so great that we second-hand buyers are obtaining quality products at or below the manufacturer’s production cost and that is seriously so amazing.
Retail discounts aren’t so great
Considering that retail markups for certain goods can reach hundreds of percent, by contrast, even the most generous discounts seem to be cheap. Why do we get this cost from saving 15% of the cost of goods that exceed 400% of the wholesale price?
When we buy new goods in a department store, we not only have to cover excessive retail markups; we will also take on the biggest depreciation event i.e changing a product from a brand new state to a second-hand state. We second-hand buyers are avoiding these forces and saving money in the process.
Value is arbitrary
Once we understand how retail markups and depreciation work, it is easy to grasp the basic fact that value is arbitrary. It is deeply influenced by the retail industry, the marketing companies they hire, and our own tendency to use new products instead of second-hand products.
Simplicity saves money
As styles change, technology changes and trends disappear and projects are eliminated. Next time you are in a second-hand store, consider the amount of cash for all inventory costs at the time of a new purchase. This always reminds us to keep it simple, favor quality and classic style, and avoid becoming a victim of expensive trends.
Thrift shopping is a game of opportunity and timing. To make the most of it, you must know what you need today and what you might need six months from now. After expanding the scope, you can find bargains, grab deals, and avoid last-minute (and expensive) purchases in department stores.
There are business opportunities everywhere
People like to buy things, but not everyone has time to find what they want and has the talent to find gems in a pile of garbage. So next time you find a thrift store stop and spend 30 minutes browsing. This is not only a hot spot for bargaining but it is an ideal place to learn to save money.