A basic principle that helps to manage personal finances is to cut down on unnecessary costs by getting the same product for less. I was recently hanging out with a friend who mentioned that she never buys generic items at the grocery store because she doesn’t trust them, since they’re not from brands she’s heard of. This really took me aback: The objection to generic items is largely a fallacy! Oftentimes, there’s little to no difference between name-brand and generic items that you find in stores—I’ve even heard stories about how the same factories will produce both the name-brand and generic varieties. More than that, generic grocery items are often more than 50% cheaper than name-brand equivalents, and generic medicines tend to be as much as 80% cheaper. Going generic can help you cut costs, and go a long way toward managing bills each month.
So, think twice before going for that Quaker Oats instead of the generic. Look at the nutrition facts of both: They’re virtually (or actually) identical, as are the ingredients!
Why, then, do name-brand items cost more? It boils down to the marketing. Psychology studies have shown that people tend to gravitate toward and buy brands they’ve heard of before. Maybe it’s a trust thing, but even if they don’t know much about the brand, they’ll still gravitate toward it because they’ve heard of it. Meanwhile, generic brands don’t even try to compete in that way because – instead of spending money on marketing and pretty packaging – they pass along the money as savings to the consumer. Perhaps the companies are trying to appeal to different consumers—for one, the competitive advantage is marketing and packaging, whereas for the other it’s just price. And, if you’re like me, you’ll agree that price is the variable that may actually make a lasting difference in your life.
Meanwhile, some generic brands have products that are as good as or even better than the originals! For example, Duane Reade (a New York area drug store) has put a lot of time and energy into creating attractive generic products, with its own Duane Reade branding. For example, I always used to like York peppermint patties, but I recently bought the drug store version instead and brought them to a get together. They were different from the originals, but my friends and I all agreed that we liked the generic better!
When it comes to generic drugs, the FDA has approved the medicines to the same standards as name-brand meds. The only differences between the generics and the name-brand meds are the inactive ingredients—legally they can’t be identical, so the generic brands may be a different shape, size, or color, but the active ingredients are the same, and these are fully approved, so don’t worry about dangerous additives.
If you can get the same product for less, why shouldn’t you? You can spend the money you saved on the stuff you really care about.