I’ve been an avid thrift-shopper for the past three decades. Beyond a simple hobby, I have to admit thrift-shopping is a bit of an obsession for me — it channels my inner treasure hunter and provides an endless source of entertainment. (I’m a cheap date.) And besides saving me thousands of dollars over the years, it’s also helped me learn a few important financial principles, too. Here are seven money lessons I’ve learned from thrift-shopping.
1. Retail Markups Can Be Massive
Retail markup on common items is so steep it should make most store managers blush. Between wholesale and retail, eyeglasses can be marked up by as much as 1000%, jeans 350%, and furniture 400%. While I don’t begrudge anyone turning a healthy profit, I don’t want to be the one to pay it. Thrift-shopping helps maximize my budget by minimizing my exposure to excessive markups.
2. Depreciation Is a Powerful Force
Depreciation is the reduction in value an item experiences over time, usually due to wear and tear. But depreciation can happen without any wear at all. Drive that brand-new car off the lot and it’s immediately transformed into a used car that’s worth about 25% less. At a certain point, the downward force of depreciation becomes so significant that those of us who buy second-hand are getting great items at or below the manufacturer’s cost of production.
3. Retail Discounts Aren’t So Great
Considering retail markup can be a few hundred percent on some items, even the most generous discounts seem cheap by comparison. Why do we get such a charge out of saving 15% percent on an item selling 400% above wholesale? When we purchase a new item in a department store, we’re not just covering excessive retail markup; we’re also shouldering the biggest depreciation event — taking an item from coveted new status to scorned used status. Those of us who buy second-hand are side-stepping each of these forces and saving money in the process.
4. Value Is Arbitrary
Once we understand how retail mark-ups and depreciation work, it easier to grasp one essential truth: Value is an arbitrary thing. It’s profoundly influenced by the retail industry, the marketing companies they employ, and our own tendency to favor new stuff over used stuff. Forget what you’ve been taught. Broaden your perception of value and save loads of cash.
5. Simplicity Saves Money
We live in a nation of excess and few places showcase that excess more clearly than thrift stores. Items are cast off as styles change, as technology changes, and as trends fade away. The next time you’re in a second-hand store, consider the amount of cash all that inventory cost when new. It’s a constant reminder to keep things simple, gravitate toward quality and classic styles, and avoid falling victim to expensive trends.
6. Planning Matters
Thrift-shopping is a game of chance and timing. To make of the most of it, you have to know what you need today and what you’ll probably need six months from now. Once you’re looking through a wider scope, you can spot bargains, seize deals, and avoid those last-minute — and expensive — buys at the department store.
7. There Are Business Opportunities Everywhere
Fact: People love to buy stuff, but not everyone has the time to hunt for what they want or the talent to spot a gem in a pile of junk. Enter the thrift-shoppers, the auction-goers, and the diehard flea market fans. Well before the Internet made selling a snap, I was flipping thrift-store finds to antique dealers and interior designers in Chicago. It turned something I loved to do anyway into a profitable business and helped me think more creatively and independently about income. (See also: 5 Things You Can Resell on eBay That Make the Most Money)
So, the next time you find yourself near a thrift store with the kids in tow, stop and take 30 minutes to browse around. It’s not only a hotspot for bargains; it’s the perfect place to learn about saving (and making) money.