Read this before your next Costco trip.
Costco is a members-only warehouse club and many people join because they believe they can get better deals on groceries and household essentials. But if your goal is to reduce the amount you're putting on your credit cards by shopping at Costco, is this likely to work out for you in the end?
Here's what personal finance guru Dave Ramsey thinks.
The good news for Costco shoppers is that Ramsey does believe you can reduce the amount you're spending on essentials by shopping there.
In fact, when addressing the issue of whether bulk buying saves you money at warehouse clubs or not, Ramsey said: "The short answer is yes." Ramsey based this answer on a comparison of more than a dozen different grocery items including coffee, cereal, yogurt, and eggs. As he showed, many items are priced lower at Costco than at competing stores and if you can shave even a little bit off your grocery bill each week by buying them there, the savings can add up.
However, Ramsey also explained that while you can save money, there's no guarantee you will. In fact, as the Ramsey Solutions blog revealed, it "all depends on what you're buying."
Purchasing the wrong items could mean you end up spending more than you would have if you'd bought at a different store. Or, you could end up overspending if you give into impulse buys, which Ramsey warns is a common issue when shopping at Costco or other warehouse stores.
Is Ramsey right?
Ramsey is absolutely right that some items really are cheaper at Costco and you can save by buying them -- as long as you make smart decisions when you're at the store.
Ramsey suggests comparing prices with other shops in your area for items you're purchasing to make sure Costco really does have the best price. "It's sad, but true—sometimes you won't see that much of a difference in savings," he said. "That's why you have to crunch the numbers and find out what's worth it (to you) and what's not."
He also urges you to consider whether the items will be used before they go bad if you buy in bulk at Costco. If you end up spending money to buy large quantities of an item but you don't use everything you bought, this could cost you much more in the end.
Finally, Ramsey also makes it clear that you need to stick with your budget when you go into Costco and not give into the temptation to overspend just to get your membership fees worth or because an item seems like it will provide good savings. Overspending on impulse items could end up negating any money savings you would otherwise get from the warehouse club's lower prices.
If you follow his suggestions, there's no question that you should be able to get more for less money. Just be sure that you are a smart Costco shopper and follow his advice on sticking to your budget and only buying items that really are a bargain.
