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The Scary Truth about Convenience · Talking FACS

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  Welcome to Talking FACS, what you need to know about family,
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  food, finance, and fitness.
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  This nationally recognized, award-winning podcast is hosted by the University
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  of Kentucky Family and Consumer Sciences Extension Program.
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  Our educators share research knowledge with individuals, families,
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  and communities to improve quality of life.
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  Hello, and welcome to Talking FACS. On this episode of MoneyWise on Talking
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  FACS, we're going to talk about the cost of convenience.
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  I am your host, Mindy McCulley, Extension Specialist for Instructional Support,
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  the Family and Consumer Sciences Extension at the University of Kentucky.
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  We live in a fast-paced society, and people don't want to wait for anything, it seems.
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  You can order an outfit, and it will be delivered within hours,
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  or at least by the next day.
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  You can even order takeout, and it will be delivered almost to your very table.
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  But we are paying a price for this convenience, and my guest today, Dr.
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  Nichole Huff, Assistant Extension Professor for Family Finance and Resource Management,
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  is going to help us understand the cost of convenience. Welcome, Nichole.
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  Hi, Mindy. How is convenience draining our budgets?
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  Yeah, well, Mindy, convenience definitely comes at a price. And so those next
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  day deliveries, you may think you're getting it free, but you're likely paying
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  for a subscription service somewhere.
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  Those Dashed or Insta deliveries, they are also coming at a price with tacked
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  on service charges and delivery fees and even tips.
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  We are definitely in a tip culture right now. So convenience,
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  it comes at a price and it represents one example of a spending leak. And so,
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  Those small, just really innocent purchases, a little bit here,
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  a little bit there, that add up over time.
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  Tell me a little bit more about these spending leaks. It sounds like they just
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  drip, drip, drip right out of my wallet.
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  What are some common examples?
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  Yeah, that's exactly what spending leaks are. So we think of a leak,
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  we think of this a leaky faucet, this drip, drip, drip, drip.
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  And so the same is true for spending leaks. These are those small habits,
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  those little spending purchases that have the potential to drain our budgets
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  over time if they're gone unchecked.
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  And so they can be part of our normal routines and it can make them very difficult to spot.
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  So some common examples, you know, they're your specialty coffees or your takeout
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  food, those delivery services that we talked about, impulse buys in person or
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  maybe one-click buys online.
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  Maybe, yeah, it's tempting, right?
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  It makes it very convenient to just not think anything of it,
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  to have it clicked and delivered.
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  And I use these services. So, no, this is something that I have to keep in check, too.
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  And so even things, streaming services, auto subscriptions, maybe alcohol,
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  junk food, even hobbies. I know I have a lot of hobbyists who listen, we do, to this podcast.
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  But that can be an example of a spending leak. Like anything that a little bit
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  here, a little bit there, and they're okay as long as they're part of your budget.
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  We'd be surprised, especially with convenience costs, how much money we could
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  save if we just made different choices.
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  I keep thinking of those things that just sneak in and I've not planned for them.
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  And those are definitely examples of those spending leaks.
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  Yes, unplanned purchases absolutely are. So some examples of common spending
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  leaks for many individuals and families are food and grocery deliveries.
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  So just how convenient are these services?
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  I think it goes back to how we define convenience, right? So they are,
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  they may seem convenient, but they're definitely not considerate.
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  They're not very convenient for our finances. They're not considerate of our
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  budgets. And these may go by. So if you're listening to this and they're like, it's not me.
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  Well, maybe it is. So some of these household names now,
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  DoorDash or Uber Eats or Grubhub or Instacart or even your local pizza delivery
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  or your grocery store, most retailers, grocery stores or eat in restaurants
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  or takeout restaurants have delivery services.
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  So, all of these are examples. And many of these names, we use them as verbs, right?
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  They are just household staples, especially if you live in less rural area across the state.
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  So, if you live near a city, but even many smaller towns, you have local establishments
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  offering delivery services, But they likely come with some charges.
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  And so one of the things I like to challenge consumers to do is to see exactly
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  how much these convenient services
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  increase your final bill, especially when you look at, well,
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  how much was your original tab versus the service fee, the delivery charge, the tips.
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  And so, for example, we'll do a little math, a little math problem here,
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  and I'll keep the numbers kind of general.
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  But if you just quote unquote dashed.
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  A to-go meal to your house, let's say a $25 meal, then in what is just common
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  service fees, delivery charges, and a 15% tip, which, you know,
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  some people go higher or lower, but that's average,
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  you would spend $14 in convenience costs for a $25 meal.
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  So that's nearly 35% of the original bill.
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  And it can, oh no, it can add up. It can really add up.
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  And so if you just did that, that one $25 meal plus that $14 convenience cost,
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  if you did that just once a week,
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  so once a week, you don't feel like cooking, you didn't bring lunch to work,
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  and you have something dashed to you, you could spend more than $700 a year,
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  not on food, on those extra tack-on fees, those convenience costs.
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  And so we're not even going to talk about how much you'd save if you just cooked
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  at home or packed your lunch. That's a different discussion.
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  Yeah, just looking at those convenience costs alone, and that's just one very
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  small example. Many times people are spending more than that or more than that
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  in fees to get something expressed to them or to get something during peak hours.
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  And so over time, these charges can really add up.
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  They do add up. And I've noticed on receipts, you know, it'll say delivery charge is not a tip.
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  So, of course, that means we do expect you to tip on top of the delivery charge.
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  And so often, you know, that just means that you're paying more for the fees
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  than you actually are paying for the cost of the meal.
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  Yeah, absolutely. We get pizza delivery frequently. You know,
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  I'm a mom of three and it is convenient, right?
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  It's convenient. And so, but we will make a point to only deliver if we can
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  go pick it up because we can get an entire pizza more for our family and what
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  we save in that delivery charge and that driver tip.
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  It equates to a pizza for our household and that's money.
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  That's food on the table for the family and just choosing our delivery method.
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  Yeah, I'm right there with you. My kids laugh at me because I'm one of those
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  people that always picks up my own piece of it just because I'm frugal.
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  So, yes. Besides food and grocery deliveries, what are some other common spending
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  leaks that we are seeing that drain our budgets?
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  Yeah, when we look at convenient spending leaks, another really popular one are automated drafts.
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  So, yes, companies will act like they are doing you a favor,
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  right, by offering an autodraft on memberships or subscriptions.
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  But when we have multiple subscriptions, maybe it is a delivery service,
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  maybe it's a membership, maybe it's a streaming service, generally we can't use everything.
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  So we have more, one or more, maybe multiple subscriptions that go unused.
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  And so streaming or cable services, that is an example I love to use. So.
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  It's so easy. And everything now, I feel like, is its own service,
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  like its own streaming service. So you can, there is an app and a channel for
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  anything you could want that comes with what seems like a reasonable fee.
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  You know, $8 a month or $16 a month, but they're not by themselves that expensive.
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  But when you take a look at the annual cost, they can really add up.
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  And so if you have, say, one streaming service that you don't use that cost
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  you $15 a month, just on average, that's somewhere between $150 to $200,
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  that you could save annually by canceling that membership.
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  Now, if you have multiple of these, it could easily be hundreds or thousands
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  of dollars that you could save.
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  And so maybe you joined, you know, like a gym, right, been there,
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  and you just don't have time to go. You start out with good intentions,
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  and it's the, you know, first of the year, right? Like, we're going to join
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  a gym. We're going to get healthy.
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  But then as the year goes on, you don't go.
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  So say your membership is $55 for an individual a month.
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  Well, that's $660 for the year that's automatically deducted from your account.
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  Now, if you're not using that service, that money could go to something else. Sure.
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  And it costs nothing to walk around the block five times.
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  Absolutely. Think of each walk around the block as paying yourself $11 if it's
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  $55 a month. That's good. I like that.
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  How do we plug those spending leaks? Do you have some tips for cutting down
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  on these convenience costs?
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  Yeah, I think it boils down to intentionality. And so the easiest thing to do
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  is to track your purchases.
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  So if this is resonating with you at all, or maybe it's not you,
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  maybe it's a child, maybe it's a girl, a teenager, or a young adult.
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  Maybe your husband has signed up for $35 a month car watches.
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  Yes, yes. Not that I have any experience with that.
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  Right. So if you are part of a household or a family and your finances affect
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  one another, take a step back and really look at the purchases.
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  And so look at what are you spending in cash or on your debit card or credit
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  card or an app or like an online payment. And so take a look.
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  When we budget now in today's very digital society, it is easy to overlook a
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  purchase. So maybe you have things set up on a PayPal account or some other
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  cash transfer app service.
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  And so you're not looking at that statement regularly every month and you forget
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  that you've signed up with a service on that account.
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  So, you know, take a look at your purchases, track them for,
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  you know, a few weeks, a few months, or look back at the last several and see
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  if there are those frequent purchases that might be,
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  they're not necessities, they're wants, but that they are adding up over time.
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  And while you're doing that, really examine your receipts also.
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  So the next time you decide to do.
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  Some kind of delivery to your house, especially if it's food or groceries,
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  see what you've been charged. See what you've been charged for service fees.
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  And some add more than just service and delivery. There can be hidden costs.
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  What are you paying in tips?
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  Add those up. This can be very eye-opening, especially to teenagers and young
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  adults who may not realize that they are paying more in the service than they are the food itself.
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  So take a chance to look at that receipt. And then ask yourself,
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  you know, what can I do with this money instead? Could I put this towards a
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  vacation, towards a purchase, you know, towards something that has some staying power?
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  But then like we mentioned with the subscriptions, take a look at those auto
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  drafts. And you can be sure to
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  look carefully, too, because auto draft subscriptions can often hide out.
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  And so maybe through if you are an Apple user, for example, you know,
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  in your Apple settings, you can subscribe. and it's automatically,
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  you know, charged to whatever payment you have set up there on your phone.
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  So they can hide out in your Apple settings or through things like PayPal or
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  cash transfer apps or even say Amazon Prime is an example of a service that
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  will allow you to subscribe and pay other services within that membership.
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  So you have to take a look and the more complicated it gets,
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  the easier it is for those leaks to just drip, drip, drip and go unnoticed.
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  And so look for things you can cancel.
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  Have hard conversations with your family about how realistically are we using
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  this? Are we getting a return on our investment with these subscriptions?
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  And then the last tip I'll leave you with, Mindy, is to say no to EasyPay.
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  Don't tell your app or your website to save your credit card information for
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  next time. Don't, because it makes it easier to do those one-click purchases.
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  If you have to physically go get
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  your account information and enter it each time, it'll cut down on your
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  temptation for impulse buys, especially if you are,
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  you know, one of those late-night couch shoppers and you have to get up and
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  go get your card to enter your information, it could slow you down enough to
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  where it could help you cut back on some of those impulse purchases that are
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  that are spending leaks.
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  These are all great tips, and I hope it will help us all save a little money.
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  We need to any, what's that, a penny saved is a penny earned?
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  That's exactly right. That's exactly right.
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  Thanks, Nicole, for sharing with us today. If you enjoyed this topic, share it with a friend.
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