Black Friday 2024: Are the Discounts Worth It or Just a Marketing Hype?

Black Friday is fast approaching, and the excitement is palpable as retailers promise jaw-dropping deals. This global shopping event, set for 29 November 2024, is touted as the perfect opportunity to grab must-have items at unbeatable prices. However, the question remains: are Black Friday deals genuinely worth the hype, or do they lead to unnecessary spending and debt? Let’s uncover the reality behind these “specials” and explore smarter financial choices.

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The Allure of Black Friday: Marketing or True Savings?

Black Friday’s popularity is undeniable, with global sales in 2022 reaching an astounding $65.3 billion, according to Forbes. In South Africa, retailers extend promotions throughout November, creating a month-long shopping frenzy. However, a study by Which? found that 98% of products sold during Black Friday in the UK were the same price or cheaper at other times of the year.

The thrill of snatching a “deal” can cloud judgment, leading many to overspend on items they don’t need. This emotional pull, driven by marketing tactics, often results in instant gratification but long-term financial regret.

Is Saving Better Than Spending?

Before diving into Black Friday sales, consider the alternative: investing your money. Steven Amey, Head of Intermediated Distribution at Ashburton Investments, suggests asking yourself a crucial question: “Am I truly saving money by spending, or would I be better off investing that amount for future growth?”

Amey highlights key factors to consider:

True Discounts: Are items genuinely cheaper on Black Friday?
Avoiding Debt: Can you afford purchases without incurring high-interest debt?
Long-Term Value: Will the purchase bring long-term satisfaction or lead to buyer’s remorse?

The Cost of Debt vs. the Power of Investment

To illustrate, meet “Mr Freddy Friday,” a fictional character with a penchant for Black Friday splurges. Freddy earns R600,000 annually but has accumulated R480,000 in debt at a 22% interest rate. Over 15 years, he pays R1.6 million, of which R1.1 million is interest alone.

In contrast, Freddy could follow “Miss Compound Interest” and invest R1,500 monthly in a unit trust with an 8% annual return. In 15 years, he would have R522,000, a testament to the power of compound interest.

How to Make Smarter Black Friday Decisions

Research Prices in Advance: Track prices before Black Friday to confirm if discounts are genuine.
Set a Budget: Avoid impulse buying by deciding in advance how much you can afford to spend.
Buy Only Essentials: Focus on items you truly need or have planned to purchase.
Avoid Debt: Pay cash or use a debit card to prevent high-interest repayments.
Invest the Savings: Redirect the money you might have spent into savings or investments.

While Black Friday can offer genuine bargains, it’s crucial to approach the event with a clear strategy to avoid falling into financial traps. By resisting the hype and prioritizing long-term financial well-being, you can turn potential splurges into investments that grow your wealth. This year, make friends with “Miss Compound Interest” and watch your money work for you rather than against you.

Also read: Amazon Launches First Black Friday Deals in South Africa with Discounts Up to 50%