Do you buy apples when you need oranges?

Every penny that is spent on a daily, weekly and monthly basis needs to be well spent these days. Making sure that we get value for money is not the same as buying the cheapest you can find, and we need to be careful that in the hunt for good value we don’t actually end up getting poor value because we’re trying to spend as little as possible.

So many comparison sites are all about the ‘cheapest’. Cheap car insurance, cheap credit cards, cheap electricity. Table after table compares the amount you spend without necessarily giving you a true comparison by looking at what you get for your money.

Let’s take a really simple example. Third Party car insurance is cheaper than Comprehensive cover, there’s no doubt about that. Why? Because if you have an accident only the car you hit is covered, you have to pay for any damage to your own car yourself. Does that make it better? Well in a small number of cases where you have a car that is worth very little you might take the risk, but in most cases Comprehensive cover will represent better value for money.

Here’s another. House insurance that doesn’t cover your personal belongings outside the house will cost you less than house insurance that covers your phone if you leave it on a bus. It costs less but is it as good for you? Will it do what you really want it to do?

We should apply the same logic to everything else that we spend money on. We’ve been sold on this idea that we need to look for the cheapest possible price on everything we buy.

But cheapest doesn’t always mean best. Make sure you’re not comparing apples with oranges.

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