This is another triumph for our friends at the colouring-in department. Every medicine sold has a product licence number (PL code), which shows the medical composition of the product. For example, OptiPharma Max Strength Cold and Flu capsules (Lidl, £1.99) and Benylin Cold & Flu Max Strength capsules (B&M, £2.29) are differently branded and manufactured by different companies but the PL code is the same. It’s the same tablet and will have the same effect. After a bit more research, I found the Benylin product listed in two well-known pharmacies for £3.79 and £4.20 respectively, so shop around. Don’t be concerned about an unrecognised brand if the PL code is the same and don’t assume that your local pharmacy is going to offer you the best value (although their medical advice will probably be better than what you’d get in Lidl!).

Although not a big ticket saver for many, I’ve included it to demonstrate a point. It’s common for two similar products and in this case identical ones to be branded, marketed and sold at different prices. If you buy into this idea and are happy to accept the lesser-known brand, there are real savings to be made.

The lottery

Again, I wouldn’t advise doing the lottery on a regular basis. If you buy a ticket for every draw, you can afford to put £25 in Premium Bonds every month. Use this as your emergency fund and you’ve still got the excitement of a bet, and you might well win a prize. The odds of landing a big payout with either are both slim, but as an added bonus of Premium Bonds, if you need to, you can take your money out again. What’s not to like?

Lunch breaks

Aside from the obvious advice to avoid buying a daily coffee from Starbucks or Costa and a packaged sandwich, there’s a link here to learning how to cook from scratch and getting better value from the food you buy. Another report by WRAP found that 70% of the annual food waste in the UK came from households and, according to data from the Office of National Statistics, the average UK household now spends around £3,234 annually on groceries, so there’s a saving to be had. The second most common food waste is bread. Lou and I eat a fair amount of bread but never throw any away. Why? Because we keep it in the freezer! But back to lunch and sandwiches. Depending on what we have in the fridge, we often take out two frozen slices, butter them, add some ham, cheese or leftovers, make a sandwich, put it in a bag and pop it back in the freezer. When we were working or going out somewhere, we’d take one out in the morning and it would’ve defrosted by lunchtime. Not only does this save money and reduce waste, it’s actually better for you as well. When the bread is defrosted, the starches present in fresh bread can’t return to their original state and become less digestible. For most people, this is a good thing, as the higher proportion of ‘resistant’ starch means the once-frozen bread is digested more slowly by the body, causing a gentler blood sugar spike than fresh bread and potentially reducing the risk of type 2 diabetes. Dr Michael Mosley (2021) is also a fan of keeping his bread in the freezer and toasting it from frozen, one slice at a time: ‘The resistant starch means fewer calories are absorbed by your body and therefore more are available for your microbiome [your gut bacteria], giving the “good” bacteria something to feed on and proliferate.’

Learn how to fix things

As opposed to throwing things away, which as you’ll have gathered is a bit of a bugbear of mine, try to keep them for longer. Again, the internet is a fabulous resource for this and you’d be surprised how simple it is to fix some things. Our two-year-old microwave turntable stopped working a few months ago and I was reluctant to bin it. A quick Google search revealed several YouTube videos showing how to replace the motor underneath the turntable with just a screwdriver. This is when you realise that despite the brand on the outside, the insides are pretty much identical. We paid £6 for an exact replacement motor (delivered the next day from an online store) and the microwave lives to ping another day. Obviously don’t tackle anything too serious or beyond your experience but many smaller failures can easily be fixed. Similarly, the catch on our washing machine door broke last week. It was surprisingly simple to take off the top (three screws), unscrew the broken lock, disconnect the little electrical sensor and replace it with a new one from eBay for £14. As with the microwave motor, it was the same part across many washing machine brands, irrespective of their ‘rankings’ in relation to perceived quality.

Summary

Spending less isn’t just about finding the cheapest price. It’s more about understanding value and buying the right specification (or not ‘overbuying’). It’s also about knowing the difference between needs and wants. You might need a car but you want a Mercedes. You might need a phone but you want the latest iPhone.

If you prioritise needs over wants earlier in life (and save money), you can then spend more freely on the wants later in life once you’re more financially secure. We wanted to fly first class to the Caribbean, so we are. We wanted to buy a convertible, so we did. It’s a matter of personal choice but we’re happy to have skewed the balance this way and now we’re reaping the rewards.

A BBC documentary I watched a while ago on how to pay off your mortgage in two years included an important takeaway about reducing your spending: you can only cut back your spending by so much. The flip side to this is how to earn more. I’ll be looking at this in more detail in a later chapter after we’ve taken a visit to the colouring-in department.

Key takeaways

Review where you buy from and how – physical stores, delivery apps or online.

Keep things for longer and get more use out of them. Don’t replace items for no reason.

Only buy the functionality you need; don’t be tempted to buy a top of the range item if you don’t need it or aren’t going to use it.

Check your credit rating quarterly and if it’s low, take steps to improve it.

Understand the true cost of buying on finance.

Overpay your mortgage whenever you can.

"Because I’m worth it?"

Chapter 4

Understanding marketing and value

Marketing and value are often misunderstood – the former when it’s done well and you believe what you see on a subliminal level; the latter because it’s hard to accept that what you perceive to be ‘good value’ might not be… I believe the two concepts are linked and I’d define them as follows:

Marketing: the activity of presenting, advertising and selling a company’s products or services in the best possible way.

Value: how much something is worth in currency or other goods for which it can be exchanged. An extension of this is how to value something, ie evaluate – to form an opinion of the amount, value or quality of something after thinking about it carefully.

As referenced earlier, the view that financial institutions are in business to make money, not solely to service you as a customer, extends to most things you buy. Obviously, there are staple products you must buy (food, clothing) but what you choose to buy is more often than not influenced by marketing. Of course, in some cases you have little choice or time and buy whatever’s available but there’s usually a selection to choose from. Our behaviour is often guided by marketing – either through direct messaging via television, newspapers or online; your previous experience with that retailer (reinforcing their marketing message) or peer pressure from your social circle or family. You’ll often have a belief that one brand is better than another or trust that the retailer will offer you good value, irrespective of your knowledge of the product. Many of us might consider ourselves ‘savvy’ when it comes to marketing but we may not give too much thought to how marketing might have influenced our shopping habits and our decision making.

Branding

Brands will market or promote either low prices (such as the discount supermarkets Aldi and Lidl), product performance (BMW’s ‘the ultimate driving machine’), overall quality (Carlsberg’s ‘probably the best lager in the world’) or value for money (John Lewis’s ‘never knowingly undersold’). You’ll usually be drawn to one or two of these marketing styles over the others and this dictates the type of buyer you are and what you’re tempted by. Recognising this in yourself helps you become more aware of the marketing that’s being employed.

There are other mechanisms that embed a brand into our minds: a catchy jingle or strapline (such as ‘We buy any car’ or Ronseal’s ‘Does exactly what it says on the tin’), or a product endorsement by a celebrity. Despite the fact that everyone knows they’re being paid to wear or use a particular product, many people believe that if it’s good enough for the celebrity, it’s good enough for them. This is even more true if you’re a fan of that celebrity. There’s a third, more niche, mechanism that could be summed up as ‘user experience’ – a good example being the lubricant and degreaser WD-40. Have you ever noticed the smell? It’s slightly sweet and unlike other similar products. The exact formula of WD-40 is a trade secret but, having worked in the business, my money is on it being a simple fragrance that has little to do with the product’s lubricating properties. However, when you use it, nine times out of ten it does what it’s intended to do and you associate that success with the smell. Therefore, WD-40 becomes your ‘go-to’ trusted brand when you need a spray lubricant. Even though there are others on the market, you don’t look at them.

Understanding value

Marketing therefore exists to tell you (or convince you) to buy something by promoting a particular attribute. Over time, you become loyal to a particular brand and continue to buy those products because you trust them to give ‘good value’ and don’t need to spend time looking for alternatives. This is the marketeer’s dream: you’re hooked on the product or retailer and they know they can continue to sell you stuff as you’ve bought into that brand. It’s important to note here that I’m not saying these products are no good or won’t perform, but are you really getting ‘good value’? To understand this, you need to look at what value is and the right level to buy at. This is important because, in general, a brand that’s perceived as ‘higher quality’ is more expensive but I’m convinced it doesn’t mean it’s any better value or that a product from a ‘lesser’ brand will perform any worse. In essence, I’m saying that many of us are tempted to buy a higher-end brand than we really need and that means we’re overspending.

Ask yourself what ‘value’ you need a particular product to have. Again, this might be different for all of us. How often you use a product, how long it will last and how many of the features it has (that you will use) all contribute to what level of value is right for you.

I love shopping and understand the excitement of owning something new. And, despite my overall tendency not to waste money, I’m sometimes tempted to buy branded items or things I don’t really need. However, I’ve managed to control this habit by only purchasing a handful of branded items and generally only buying second hand or in a sale. My desire not to pay over the odds for something is usually stronger than wanting any particular item but I’m not immune to the odd lapse. It’s interesting that my dislike of wasting money has grown stronger in proportion to the growth in value of the investments from those savings.

The questions to ask yourself here are:

Do I need all that functionality and will I use it?

Is it really any better than a similar product, irrespective of the label?

Do I believe it will have a reasonable lifespan (ie at least five years)?

Then it’s down to a financial choice of whether you’re prepared to pay a price premium for a particular brand over a lower-priced brand. There’s often a final option of whether the branded item is available second hand, so you can get the ‘brand experience’ at an unbranded price. This is particularly true of cars but also of clothing. As I’ve mentioned, I’m a big fan of the online marketplace Vinted, not only to resell unwanted items but also to buy good quality clothes. I’m amazed by how many items for sale are ‘new with tags’, for a fraction of the cost of buying them from the retailer. In the past few months, Lou has bought an unworn Barbour jacket and a pair of new/boxed leather boots by Dune and I’ve bought a pair of unworn Next leather loafers – all at less than a third of the price of the shop-bought versions.

As I’ve said before, managing your money doesn’t just mean being ultra frugal all the time; you’re allowed to indulge in a bit of ‘brand luxury’ every so often. But it’s important not to lose sight of the concept of value and changing your spending habits to focus on products that do represent good value.

Seven brand tiers

How, then, do you determine what is good value versus overpriced or too cheap? Consider the following seven brand tiers.

A niche brand that only makes or sells a specific type of product and is a market leader. Their focus is on one product type – for example, Rolex or Rolls-Royce.

A designer label: many clothing brands fit into this category. A shirt is a shirt; the design may vary slightly or use different materials but it does the same functional job as every other shirt. Generally, the designer label is considered a premium brand and therefore at the upper end in terms of cost (to buy). Originally, these were the big fashion houses such as Versace or Christian Dior, who crafted small runs of bespoke, often hand-made, clothing, but it has moved into more mainstream production where the name is heavily marketed but the manufacture is no longer particularly unique, nor the design anything special. I would also include instances where a brand is used across an alien product range. For example, Porsche build cars and if I were after a sports car, it would be one I’d consider. They don’t make watches, so I wouldn’t buy a Porsche-branded watch; I’d buy a watch from a company whose business is making watches.

A supermarket brand: functional (everyday) products that carry a retailer’s own brand labelling but are similar to other products. All the big supermarkets have these, as well as large retailers such as John Lewis or Screwfix.

A ‘boring’ brand: it does the job, isn’t overly expensive or exciting but just doesn’t have much in the way of street cred. These types of brands are often shunned due to peer pressure. These brands might be thought of as mid-range – neither perceived as high quality but equally not seen as budget nor cheap. They are normally related to long-term businesses, not newly formed start-ups. I’d put Vauxhall cars, Clarks shoes and Bic biros in this category.

A duplicate brand: this type of brand was originally seen in the car industry but is becoming more widespread in other markets. Volkswagen’s own brands range from Bentley and Audi through to VW, Škoda and Seat. In essence, they share much of the ‘internals’ of the product and benefit from shared support services in design, purchasing, supply chain, etc.

A pseudo brand: this type of brand is often historic and was previously successful but the underlying business has struggled and been bought out by another retailer. House of Fraser is a good example of this, having snapped up many traditional brands such as Slazenger, Everlast, Jack Wills, Evans Cycles, Gieves & Hawkes and many more. They’re recognisable names but are no longer independent.

An ‘unknown’ brand: regularly seen in online marketplaces with products that look similar to branded items but are produced by companies with more consonants in their names than a bad round in Countdown.

You may have concluded that tier 1 is the most expensive and tier 7 the least expensive. I’m using the word expensive carefully here to mean the price the customer pays. Aside from tier 1, the manufacturing cost (ie the effort taken to make the product) is broadly similar. There’s also the cost of the raw material and this does vary, notably for clothing and food. Clothing is straightforward: silk is more expensive than polyester, leather more expensive than plastic. Food is a little more complicated as most of us don’t have any technical knowledge about ingredients but it follows a trend of cost reduction. When I was a kid in the 1980s, Jacob’s Club biscuits were advertised with the jingle ‘If you like a lot of chocolate on your biscuit, join our club’. However, as the cost of cocoa soared, they reformulated the ingredients to include more fats, emulsifiers, sweeteners and flavourings (all cheaper) instead of cocoa, to the point where they might no longer be truly what we might think of as chocolate biscuits, but labelled as having a ‘chocolate-flavoured coating’. Although they were at the same price point and branded as the same biscuit, they had become a lesser-quality product. While this type of reformulation occurred with many food products, the current trend is to move back to more natural ingredients; indeed, McVitie’s Club Orange Chocolate Biscuit now cites ‘no hydrogenated vegetable oil, and no artificial colours or flavours’ in its ingredients.