Buy Bulk If You Enjoy Keeping Your Money Away From Inflation

Today I want to venture into another completely new area, the area of finance/preparedness, and specifically, buying in bulk to keep your money from inflation.

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Face it: the value of your money will naturally decrease over time (inflation).

How can you avoid inflation’s grip on your money?

Start with $1000.  I’ll assume you want to purchase something non-perishable but still a consumption item, like a paper towel roll.  So let’s do the math on buying the paper towel rolls in bulk now versus buying as you need.

Say your inflation rate is 5% (for the sake of this example; that is not actually accurate).  That means that after a year, your $1000 will be worth 950, and the next year, maybe 903, and so on.  After maybe 15 or 20 years, assuminng a fixed inflation rate, your money will probably be cut in half.

But if you buy all $1000 in paper towel rolls right now, you will probably end up saving money in two different ways, because, a) buying in bulk is cheaper (compare Costco’s big bulk unit prices to Target’s smaller unit prices),  and b) you spend the money now, saving your money from inflation.

There are only two downsides (as far as I can think of) to buying bulk: a) you lose storage space, and b) you lose the money now, not gradually.

But obviously, the pros of saving your money in most cases would greatly outweigh the only legitimate con of storage space.

So, if you are purchasing a non-perishable consumption item, it probably will make sense for you to buy in bulk.

Here’s the chart:

 

Years                BUYING IN BULK                                                      BUYING AS YOU NEED

1 $1000              Full $1000 gone now, you have                             Roll a week @$2 each = $100

13 years of paper towels (adjusted

for bulk discount)

2 $950                                                                                                       $100

3 $903                                                                                                        $100

4 $858                                                                                                        $100

5 $815                                                                                                         $100

6 $774                                                                                                        $100

7 $735                                                                                                         $100

8 $698                                                                                                         $100

9 $663                                                                                                         $100

10$630                                                                                                        $100

11$598                                                                                                         $100

12$568                                                                                                         $100

13$540                                                                                                         $100

 

 

If you buy as you need it, after 13 years your original $1000 gets cut down to $540!!!

You see, the $1000 would be spent for paper towel rolls anyway over that decade or so, but when you buy in bulk you save nearly half the money (this post, of course, isn’t very accurate when accounting for inflation, so look for your real inflation rate if you want to do a calculation of your own)!

I hope this post will help save you money by stocking up now, instead of later!

 

 

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