Getting something on sale is a great feeling, but it can mess with your mind. We all know this, but it’s hard to avoid our mind’s internal bias. Here’s a good mantra to repeat to yourself: A dollar is a dollar, not a percentage of what you’re buying.
Australian money photo by Shutterstock
Japp Weel says it well over on Quora:
A dollar is a dollar, not a percentage of what you're buying
Remember that saving 5% on a $10000 item is not at all like saving 5% on a $10 item. But in order to process decision problems at different scales, the brain tends to normalize things so the two cases appear similar. Ever since I studied behavioural economics, I started spending less time worrying about saving 20 cents on spaghetti, but I spent a lot of time thinking about what car to buy and making sure I got a good deal on it. You can buy a lot of spaghetti for a $US4k discount on a car, and yet I see people who spend lots of time on grocery coupon clipping but never stop to consider whether they could move to a cheaper apartment, drive a cheaper car, etc.
This is very similar to Ramit Sethi's idea of "big wins": Sure, you could save money by skipping lattes, or you could go for the big-ticket items you're already spending on. One will produce much bigger savings, much quicker.
Weel actually has a whole list of great financial advice to live by, so hit the link below to read it all. There's some good advice there.