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Using Loss Leaders to Save Money

By: Joshua Unseth-- 2010-08-19 6:00 am --

Every week, you probably receive a pile of circulars from the grocery stores in your town. Before you say "junk mail!" and throw them in the trash, consider the ways that you can save money using these ads.

The great deals that you see on the front of the circular are called "loss leaders." These are extra low prices that actually cause the store to lose money. Why would they offer you products at a price lower than their wholesale cost? The answer is because the stores understand how people spend money. If they offer you, for example, breakfast cereal at $1.50 per box, chances are that you are going to buy marked-up milk to go with it. Even better for the store is if they set up an attractive display of breakfast cereal, toaster pastries, orange juice and breakfast sausage. Now suddenly you are buying all of the things that you don't need, all for the sake of saving a dollar or two on breakfast cereal.

The good news is that you can beat the stores at their own game. Gather up all of the circulars that are within a few miles of your home. Don't worry if they're in opposite directions; chances are, you will be going past them all within a week's time anyway. You don't have to do all of your shopping in one day, after all. If you live in an area that is inundated with grocery stores, then pick three stores that you would like to visit this week.

Make a list of which items are a great deal at each store. You might be buying breakfast cereal and chicken at store A, milk, eggs and pork chops at store B, shampoo and apples at store C, etc. Now make a rough menu plan. Can you incorporate all of these great deals into your weekly menu? If they're non-perishable, can you use them within a month? If not, cross the items off. Buying food that will go bad before you eat is is not going to save you any money. What else do you need for the meals that you have planned to eat? Look through the circulars again, searching for those items. You should now have a list of where you will buy each item that you need.

While this approach takes a bit more time than doing all of your shopping in one place, it will save you money in the short- and long-term. How do you organize your shopping to save the most money?