Since I have a B. A. in Economics, I tend to view the world through the eyes of an economist. One of the reasons that I enjoyed studying it was because economics touches our lives every day. From the Federal Reserve to basic behaviors consumers exhibit, economics covers a wide range of topics.
I’ll only write about one facet of economics today and that’s regarding price elasticity. A consumer good is considered to be elastic if changes in price impact the change in demand. Likewise, a good is inelastic if price doesn’t impact demand.
An example of an elastic good is ketchup. Very few people are particular about the brand of ketchup they use and instead choose the cheapest option. And if ketchup ever became too expensive, many people would do without or use a different condiment.
The best example of inelastic goods are those made by Apple. Generally, Apple customers are loyal and willing to pay more for their products (compared to lower priced Android products.). Many will also line up for hours to do so! Medical supplies are also inelastic, as people are willing to pay whatever the cost for medications they need to survive.
The question I have for you is this: Is loyalty ruining your budget?
We all have certain brands that we love for various reasons. It may be quality (real or perceived), style, taste, or value. I would never suggest that you stop buying Apple products (since I own these as well), but I would suggest that you look at the items you buy and examine if a cheaper option would work just as well without impacting your quality of life.
This will have the biggest impact on expensive items: electronics, appliances, designer clothes, and even cars. But it makes sense to look at the smaller items as well since little amounts add up quickly. Just think of how much faster your savings could grow by substituting a less expensive option every now and then.
What brands are you most loyal to? Are there any items you’d consider substituting a less expensive brand?