But there’s a problem with that philosophy, one that’s explained very well by Allie, who recently emailed me on this topic:
The reason I don’t buy generics is because I’ve usually already found a brand I like, so why should I risk buying something I don’t like?
It’s a good argument, so let’s walk through the logic a bit and see where it leads us.
The Generic Argument
Let’s say you’re in a grocery store and you’re looking at your various options for tomato sauce. You can either buy a name brand you’re familiar with - like Hunt’s - or you can buy the store’s generic brand. Which do you choose?
If you flip the cans over and compare the ingredients, you’ll usually find that they’re identical. The contents of the can you’re buying are the one and the same for many items.
The only significant differences, in many cases, are the labeling and the price. The name brand usually has a prettier label from a brand you recognize, but the other one is usually substantially cheaper.
If the item inside the package is the same, take the cheaper one. Is it really a value to spend extra for that nice label and that name that you may have heard of before? Likely, it’s not.
But Not All Items Are The Same
Obviously, though, there are differences in quality between brands with many items. You might not be able to distinguish between tomato sauces, for example, but you certainly can distinguish between brands of toilet paper.
Because of this varying quality, most people tend to find a brand that they know they like and stick with it (lo and behold, the status quo bias strikes again!). It actually makes sense - it makes shopping easier and you know you’ll wind up with a product that works for you.
This is the thought process that leads people to fill up their cart with name brand items. They are familiar with those items and know that they meet their basic needs, and because this is the “norm,” they fill up their cart with those items, quietly paying the premium cost for a perceived insurance of basic quality.
The “Generic” Experiment
Instead of following that route, try this one on for size. The next time you go to the grocery store, actively replace all of your regular purchases with the low-end generics. Buy the cheap dish soap, the cheap deodorant, and the cheap wheat bread. Then just use them like normal and see if you actually notice any difference.
Likely, you will notice that some items are lower in quality. Some might even find that some aren’t acceptable for your use. However, many of the items will just automatically replace the more expensive versions without you even noticing.
Keep track of the ones that work for you and the ones that don’t. You may find that generic spaghetti is a good buy for your family, but your family hates the generic toilet paper. Lesson learned - go back to the name brand toilet paper, but stick with the generic spaghetti.
Make Up For The Losses
All of this sounds great in theory, but it doesn’t really help if you’re standing in your kitchen one night holding a jar of really foul generic peanut butter that you don’t want to consume. If you’re just throwing that jar of peanut butter away, isn’t that a waste of money?
Of course it’s a waste of money, but if you discover a handful of generic items that work for you and your family, it more than balances out over the long haul. Let’s say you try twenty five generic items on your next shopping trip and, on average, they cost $2 and save you $0.50 off the name brand. At the end of that week, you find that ten of the generics are up to snuff and become regular parts of your grocery list, while ten more aren’t up to snuff and five more were bad enough that you had to chuck them.
On that first grocery bill, you saved $12.50 overall. At home, though, you had to chuck five items, which at $2 each ate up $10 of that savings, leaving you only $2.50 ahead and with ten generics you really don’t like. Not the best deal, right?
But look at the long haul. If you buy the ten generics you do like twice a month, your newfound use of generics saves you $10 a month in perpetuity. Every month, you’re spending $10 less than you would have spent and your family is just as happy as they were before.
Give “The Generic Experiment” a Try!
This week, buy generic versions of everything on your shopping list. Keep a list of all of the generics you bought and put it on the fridge. If you discover one of the generic items isn’t up to snuff, just cross it off that list on the fridge.
The items that remain on that list are the “safe generics” - ones that are okay for you to buy. If you find yourself with even a few items on your “safe generic” list, this experiment will pay for itself and far more over the long haul. Likely, you’ll be surprised how many of the generics are as good as the name brands for your own use, and that fact will save you a lot of money on your food and household expenses.
The Simple Dollar chronicles a man's road to recovery from "total financial meltdown." As author Trent Hamm puts it, "The Simple Dollar is a blog for those of us who need both cents and sense: people fighting debt and bad spending habits while building a financially secure future and still affording a latte or two." We'll post a couple of entries a week, but you can check out his writing daily at www.thesimpledollar.com