The Cost of Convenience

A key factor that determines what people spend money on every day is convenience. Convenience generally saves time but can add to the cost of products and services because somebody did some work for you (e.g., marinating meat or fish or making kabobs). 

An estimated $751 billion is spent annually by Americans on convenience items according to a study by Finder, an online data aggregator.

 

Consider the following ten examples:

¨    Buying sliced fruit at a supermarket vs. whole fruit (e.g., melons and strawberries) and cutting it up yourself; ditto for packaged salads vs. cutting up lettuce, tomatoes, etc. yourself

¨    Using food shopping delivery services vs. shopping yourself at a supermarket

¨    Ordering home food delivery (e.g., DoorDash, Grubhub) from restaurants instead of eating out

¨    Taking a cab or ride share (e.g., Uber, Lyft) vs. using public transportation or even walking

¨    Eating out, take-out, or meal delivery services vs. cooking food at home and brown bagging

¨    Visiting a drive-through vendor for coffee and/or breakfast vs. preparing these items at home

¨    Shopping online, being tempted to overspend, and having to pay shipping and handling fees

¨    Buying home-delivered books online that could be checked out for free from a public library

¨    Using vending machines to buy snacks or beverages instead of bringing them from home

¨    Hiring a home cleaning service or lawn mowing service vs. performing these tasks yourself

 

Another example of high-cost convenience spending is using plastic (debit or credit cards) or mobile (digital) wallets (e.g., Google Pay, Venmo, Apple Pay) to make purchases. Studies have found that people spend more when no physical money is changing hands...about 30% more when they don't spend with cash.

According to a Pew Research study, in 2022, about 41% of Americans said none of their purchases in a typical week were made with cash, up from 29% in 2018. Digital wallets are even more convenient than credit cards because people don’t need to carry a credit card and can pay with their phone. The easier it is to spend money, the more money people typically spend.

Bottom Line: convenience spending methods are here to stay and people often use them to help manage their busy lives. Convenience is not necessarily a bad thing but people need to understand the price tag and evaluate how convenience deccisions affect their finances. 

When money is tight, it may be wise to ditch convenience in favor of inconvenient, but lower cost, spending options. Personal decision rules are also useful (e.g., a spending limit for spontaneous purchases). 

For additional information about the cost of convenience, view this OneOp webinar.

This post provides general personal finance or consumer decision-making information and does not address all the variables that apply to an individual’s unique situation. It does not endorse specific products or services and should not be construed as legal or financial advice. If professional assistance is required, the services of a competent professional should be sought.