When I was a kid, I understood that my family didn’t have a lot of money. We weren’t poor, but we definitely couldn’t buy whatever we wanted.
Both of my parents were teachers—my father: history; my mother: chemistry—though by the time my oldest brother was born, my mother decided to be a stay-at-home mom (after all, it was the late fifties).
By the time I came along (in the later part of the sixties), my dad was a junior high school principal and my mom was still taking care of her (now three) kids with devotion and a sense of fun.
Even as my dad rose up the ranks—to principal and then head of the Board of Examiners, the agency in charge of testing all the teachers, principals, and superintendents in New York City—my parents remained really careful with money.
Never, ever cheap or miserly, just mindful in a way like no one else I knew.
“Why buy tuna when it’s not on sale?” my mom would ask.
So when Waldbaum’s, our local supermarket, ran a sale on tuna, my mom and dad would head to the store and stock up on probably two dozen cans of it.
We’d keep some in the kitchen, but the rest would go in our pantry in the basement, which was simply a closet with shelves.
There you could find not only tuna, but just about every nonperishable item a family would use, from dozens of rolls of toilet paper, to more than twenty bars of Dove soap, to half a dozen half-gallon cans of Hi-C Fruit Punch (I know…Fruit Punch? But remember, it was the seventies.)
There was more to this strategy than simply buying items on sale.
My mom would clip discount coupons from the Sunday newspaper or the free fliers distributed by the supermarket, save them in a pouch, and use them to purchase the sale item.
So not only would she buy tuna when there was a 10% sale at the market, but she would also use any coupon that would offer her, say, an additional dollar off for every five cans purchased.
The pièce de résistance: “Double Coupon Days”—when you get twice the benefit of a coupon, and a cause for celebration around our home.
That dollar off was now worth two!
Stockpiling to Save
It was sort of like a game for my mom, who would have probably been a commodities trader had she been born a few generations later.
But these strategies were more than just recreation—there’s no question that the money saved over many years allowed my parents to build a large enough college fund to send me to the private college of my choice.
That’s a whole lot of money saved on tuna.
Of course, all of this reverence is in retrospect. At the time, I remember being embarrassed by our pantry in the basement.
When I played with friends down there (there was a Ping-Pong table, chalkboard, and lots of toys) and they inevitably located our stockpiled pantry during a game of hide-and-seek, they’d yell, “Are you running a restaurant?” or worse, “Worried there’ll be a nuclear war and you’ll be forced to go underground?”
But what really turned my cheeks red was the much less glamorous truth: Buying in bulk at a huge discount is a great investment. Who knew?
One of my favorite finance writers, Andrew Tobias, author of The Only Investment Guide You’ll Ever Need, summed it up best.
In his brilliant article “Stockpiling to Save,” Tobias discusses the merits of buying sale items in bulk. Here’s an excerpt:
“Say you’re a couple who drink one bottle of red wine every Saturday night. And say, to keep the math simple, you go for the fancy stuff-$10 a bottle. Say, finally, your wine shop is like mine: it offers a 10% discount if you buy by the case. What kind of ‘investment return’ can you “earn” buying by the case? Ten percent? No, it’s better than that.”
The old way, you paid out $10 every week. Buying by the case, you lay out $108 ($120 for twelve bottles, minus the 10% discount). That means tying up an extra $98, but “earning” a $1 discount on every bottle for doing so.
In the course of the year, that comes to $52. Gosh! That’s quite a reward for keeping, at most, an extra $98 tied up throughout the year.
It works out to better than a 53% return tax- free, no less, since the IRS doesn’t tax you for smart shopping.
In retrospect, I guess I should have been proud of my parents’ stockpiling habits; their pantry portfolio certainly paid off for us.
What are some ways that you’re a smart investor in a nontraditional sense? What are some of the bad (or good) money habits that your parents had that you remember?
© 2013 Beth Kobliner, All Rights Reserved
Beth Kobliner is a personal finance commentator and journalist, author of the New York Times bestseller Get a Financial Life: Personal Finance in Your Twenties and Thirties, and a member of the President’s Advisory Council on Financial Capability. She is co-author of the forthcoming children’s book Jacob’s Eye Patch (Simon & Schuster, September 2013), which she wrote with her nine-year-old son. Visit her at bethkobliner.com, follow her on Twitter, and like her on Facebook.