09.09.26 Price Versus Quality / Healthcare, Retirement & Job Lock

The Clark Howard Podcast

Clark Howard explores the trade-off between price and quality in everyday purchases, sharing personal examples where he chooses cheaper options

Key takeaways

• Paying less isn't always saving money—low-quality items that break quickly can cost more over time.
• Mid-market appliances often outperform high-end models due to better reliability and lower complexity.

Main topics

• Price vs. Quality in Consumer Decisions
• The Hidden Costs of Cheap Products

Notable quotes

"I will accept lower quality for a lower price. I mean, I'm just straight out like that."

"There are things that even cheapskate me have standards."

Conclusion

Clark Howard emphasizes that smart financial decisions require balancing price and quality, especially when long-term value matters. He urges

Transcript preview

Speaker 1 (0:04) I'm so glad you're with us here on the Clark Howard Show. Our mission is to serve you with advice and information that empowers you so you make better financial decisions in your life. In this episode, I'm going to tell you about something I'm accused of all the time, choosing lower prices over quality. Is that a good idea or am I just plain dumb? Also, are you having to stay in the job you're in because of the benefits you're offered? Wow, you wouldn't believe how many people are having to do that. So, big debate. I've always said I will accept lower quality for a lower price. I mean, I'm just straight out like that. As an example, my beloved Costco, a lot of the clothes there I won't buy because they're too expensive, in my opinion. I know there are people who think that's really crazy. But I will not spend money on something that I think I could get by just fine with something that is maybe not as high a quality. Speaker 1 (1:19) There are times that that makes you, what's the expression? Pennywise, pound foolish. It is always a dilemma if you are making a choice knowingly to spend less for what could be an inferior experience. And so I'm not an idiot. I mean, there are times, well, maybe I am, but there are times that I do. pay more money because of safety for me or my family. I think about when I pick hotels, I will avoid a neighborhood that I see in reviews is really sketchy. I was helping my oldest daughter with a hotel reservation recently in Phoenix. And so I was looking at hotels that were around. Phoenix Sky Harbor because she had a morning flight and needed to stay at an airport hotel. And if you're familiar with the Phoenix metro area, the airport is really pretty long and skinny. And so there are so many different areas that airport hotels can be located. So I found a real deal at a new hotel and then started reading the reviews. And one after another was talking about how frightened they were of the neighborhood. Eliminated. So there are things that even cheapskate me. I have standards. But there's something else, too. My wife still has some of her clothes are from when she was in high school. It was pretty amazing, right? Lane buys almost all her clothes used. But she understands fabrics. And she buys items that have stood the test of time, that are going to wear well, are well made. And she saves money. And the way she does it, instead of buying new high-quality stuff, she buys used high-quality stuff. There are things you can do and all of us negotiate in our heads when we make decisions about what we buy, where we buy, and if we buy at all. And so, yeah, I will, very different from my wife, I will buy lower quality for a lower price. She's never going to do that, but she will look for a way to save money on stuff. It is potentially false economics when you buy something that falls apart right away. But I gave an example recently of why in appliances, buying high-end is generally a mistake versus buying big production run mid-market models. Because the high-end ones tend to have a lot more gizmos and gadgets and wow factor things. that run the price up. reduce the number of units of production, and they're more likely to be unreliable, more likely to break than a mid-market model of an appliance. And that's just an example that it can't just be one strategy for everything. One thing, though, that I always buy rock-gut-cheap, a television. Why? Because the beauty of the screen on the cheapest TV is amazing by itself. Why spend three, four, eight times the cost for the latest cutting edge thing that in two years is going to be the bargain TV? Why indeed? Oh, and by the way, on TVs, the reliability, even with the least reliable brand, is fantastic. Krista? Speaker 2 (5:33) Okay. Daniel in Virginia says, my children, 17 and 19, recently received $20,000 each as an inheritance. Well, I'm Speaker 1 (5:42) sorry they lost a loved one. Speaker 2 (5:44) They have good college funds and cars. How best should we invest and save this money? What are the best types of accounts for us to look into? Their 529 plans are fully funded and they each have a savings account with approximately $5,000. Both have jobs to pay for their gas and have fun money. Please help us to maximize this financial blessing to best serve them in the long term. The kids are okay with not having access to this money in the immediate future. Speaker 1 (6:10) Danielle. Okay, first of all, I'm sorry about the loss of a relative. Second, you couldn't have teed me up a better pitch than this because you said that they both work part-time, right? Mm-hmm. Speaker 2 (6:27) All Speaker 1 (6:28) right, and they got 20 grand here. The answer is to funnel that money into a Roth for each of them year after year after year, as long, you can't ever exceed in a year more than they make in a year. But over the next many years, they'll be able to fully migrate that 20,000 into each their own Roth IRA. If you look at a compound calculator, We have one at Clark.com. And you see what that $20,000 is going to be worth for each of them in 50 years, let's say. It's unreal how much that money will be worth invested. So what I would recommend, open an account for each of them with one of the discount investment houses. I always talk about my three favorite children, Schwab, Vanguard, Fidelity. Put the money. And the money market there, whatever they make this year, throw that amount of money into a Roth from that. And every year, keep doing that till all the money is migrated from that $20,000, at some point in their 20s, all into a Roth IRA for the future. It is the best gift the late relative who gave them that money could ever give, is give them long-term financial security. From the get-go in their 20s. For Speaker 2 (7:58) sure. David in Massachusetts says, I'm a bit confused over which bits of your advice I should listen to. Let's suppose I've won a collectible or other expensive item in an online auction. I have no previous relationship with the seller, so usually my priority would be looking for some protections that a credit card would afford me. However, many sites these days add that to... to 3 % fee if you want to pay with a card. If you've bought a pricey item, that can be quite a lot of additional money. There are other options like sending a physical check, which you've said is a bad idea because of check washing and potentially lost in the mail concerns. Paying with Zelle or PayPal, which can often not only add a fee, but as you've cautioned, open your account up to potential exposure or do a wire transfer. ACU, I think it's called, which seems to offer no protection if the seller misrepresents the item. Speaker 1 (8:51)