When we think of spending, we often look at the unit cost: A banana for 25 cents has a unit cost of 25 cents, and 10 bananas for a dollar is ten cents each. So it is natural that we think of the latter as being a better buy.

But is it? Not if we only want/need 3 bananas, in which case we’re spending $1 instead of 75 cents, or to put it another way, we’re spending 33% more than we wanted to.

And when we think of percentages as not being very important, as in “it’s only 10% more”, think of the symmetry with your income: what would you think if your employer gave you a 10% raise? In most fields, that would be phenomenal.

But saving 10% is the same as earning 10% more. So every 1% you save is the equivalent of a 1% raise, and it’s easy to overspend by 10%, 25%, and even 50%.

And that happens often when we are buying based on unit cost instead of overall cost.

For example, a humbling example, the other day I looked at my collection of spare light bulbs, and realized that I have quite a few light bulbs that are for only the fixtures in my bathrooms. I recall buying a pack of six, or maybe eight, based on the unit cost, but not taking into account that I rarely need such bulbs, and am otherwise just buying, then storing, ones that I don’t yet need.

So I may have saved based on unit cost, but on overall costs, I spent money on items that I didn’t yet need. And that violates the 1-1-1 Principle, buying things that I didn’t immediately use, nor are being used one month and one year later.

Look around your home at how many things you’ve bought in bulk, a lower unit cost, but didn’t yet need, and for some – such as bananas – will go “bad”, or be obsolete before they can be used. It’s what might be deemed the Avocado Principle: at Sams Club I often buy six avocados in a bunch, but usually two of them spoil before I can use them.

This struck home for me when someone I knew bought glasses, with the “buy one, get one free” enticement. But does someone need two pairs of glasses? That violates the Redundancy question in the 1-1-1 Principle, that a person can only use one at a time.

Would that person buy two pairs of glasses if each of them was half price of a single pair? Doubtful, so it’s probably not really a savings: one should not compare the price of each of the two pairs, the unit cost, against the price of a single pair. One should compare the price of the two combined against the price of only one, which is what is really needed.

The same applies for all other items, and is compounded by another cost, the cost of storage. Newly built in my neighborhood is a facility of storage units, and another is in development. Why? We have so many things we don’t need – have immediate usage of – that they have outgrown our ability to store them in our own (not small) houses.

The cost of storage is made worse by the cost to ourselves in terms of organization, clutter, chaos, and weight of having so many items around. I’ll admit to being in the embarrassing position of buying things that I know I already have, such as a particularly-sized screwdriver, but amidst the clutter cannot find.

So instead of looking primarily at unit cost – a clever way for marketers to upsell us from what we actually need – look at overall costs. 75 cents of bananas is objectively less than one dollar of bananas, no matter how much each one is.

A penny saved is a penny earned. – Benjamin Franklin

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