Financial Literacy

VLFCU is thrilled to introduce a new digital financial education initiative through our partnership with MoneyEDU. The program provides our community with an engaging learning experience around critical personal finance topics such as building emergency savings, managing debt, mortgage education, and retirement planning.

Highlights of the program include:

  • A series of interactive courses on key financial topics.
  • Includes several financial tools and calculators.
  • Mobile and tablet enabled so you can learn anytime, anywhere.
  • It’s FREE for everyone!

Your financial well-being is important to us and we are committed to providing you with resources to manage your money. Click here to get started and become financially empowered!

For additional educational and consumer resources, we recommend that you visit the website for the National Credit Union Association. There you will find curriculum guides for teachers, finance & budgeting games for youth and teens, consumer protection updates, and government resources specific to veterans, service members and their families.

Need help consolidating debt, improving your credit score, or saving for the future? Stop by any of our branches or call us today at 1-800-691-9299. It’s always our pleasure to serve you!



How Companies Get You to Spend

A look at the sometimes astounding steps businesses take to maximize consumer spending.


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How Companies Get You to Spend

A look at the sometimes astounding steps businesses take to maximize consumer spending.

Everyday Pressures to Spend

An introduction to the sometimes astounding steps businesses take to maximize your spending.
A woman comparing two soda bottles in a supermarket.

You might not be aware of it, but there are forces hard at work to separate you from your hard-earned cash - and they are present virtually every second of every day.

When you pick up a restaurant menu, there's an excellent chance that it's been designed to get you to spend more than you'd like. The way the dishes are described, the space they occupy on the menu - even the way the prices are listed - is designed to elicit a response. And it's based on scientific research.

The same holds true for grocery stores. How you walk through the store is carefully plotted to an exact degree. Even the way the groceries are stocked is designed to help you buy the high-margin items they most want to sell.

But the pressures to spend extend far beyond physical stores. Social media has become a powerful force shaping our spending habits. Platforms like Instagram and TikTok have transformed into virtual marketplaces where influencers showcase products and lifestyles that can trigger our desire to purchase. The lines between entertainment, social interaction, and advertising have blurred, creating a constant stream of subtle (and not-so-subtle) spending cues.

Moreover, anchor pricing has become a ubiquitous strategy in both online and offline retail. This tactic involves presenting a higher "reference" price alongside the actual selling price, creating the perception of a bargain. For instance, you might see a jacket listed at $100, marked down from $200. The $200 serves as an anchor, making the $100 price seem more attractive, even if the jacket was never truly intended to sell at a higher price.

The digital revolution has also brought unprecedented convenience to shopping, which can be both a blessing and a challenge for consumers. With one-click purchasing, saved payment information, and 24/7 access to online stores, the friction between wanting and buying has been dramatically reduced. While this convenience can save time and effort, it also makes impulse purchases easier than ever before. The instant gratification of buying something with just a tap or click can lead to spending decisions that we might reconsider if given more time.

This week, we'll explore how retailers and service providers nudge consumers into spending more. From the psychology of sales to the hidden costs of subscriptions, we'll help you:

  • Recognize pricing and promotional strategies.
  • Navigate retail environments more confidently.
  • Understand the psychology behind sales techniques.
  • Evaluate advertising messages more critically.
  • Manage subscription services more effectively.

It's important to note that while retailers and service providers naturally seek to attract customers and increase sales, many of these strategies also aim to improve customer experience and satisfaction. As consumers, clearly understanding these practices can contribute to more confident and informed purchasing decisions.

The pressure to spend is all around us, from the carefully crafted layouts of physical stores to the personalized ads in our social media feeds. Yet by raising our awareness of these tactics, we can ensure that our spending reflects our budgets, needs, and financial goals.

So let's get started!

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Are You Really Saving With a Sale?

How discounted items serve as an irresistible draw - for better or worse.
A SALE sign in a store window.

Unless you're fabulously wealthy, it's hard to resist the draw of a good sale. Nothing motivates a buyer like hearing "fifty percent off." 

But when is a sale not really a sale? And are all sales made equal? Can the pursuit of a bargain actually cost us more money in the long run? 

Sale prices aren't always what they appear to be. Let's consider some of the tactics sellers employ to exploit our unceasing appetite for bargains.

The Sale That Isn't

Sometimes, a sale is totally transparent and a good deal for all involved. Unfortunately, not all sales are consumer-friendly. A study by Profitero, an e-commerce analytics firm, found that some online marketplaces list up to 75% of their products as "on-sale" at any given time, often using inflated original prices to create the illusion of a bargain. But when a sale is perpetual, isn't it just the regular price?

Even famous Black Friday sales don't always offer the lowest price. The same firm found that only 2% of Black Friday sales offered prices lower than other times of the year. Consumers, however, typically see these items marked as sales and assume they are getting a one-time discounted price.

Consumers shouldn't automatically assume that "sale" means a better price. Sometimes, it's just a matter of marketing.

The Vanishing Bargain

Sometimes, a sale seems too good to be true - and in many cases, it is. Another tactic retailers often use is promoting a deeply discounted, highly desired item that's sold in limited quantity. If you're one of the lucky few to land the item, that's great.

However, for the consumers who arrive after the items are sold out, there's only disappointment - and plenty of regularly priced merchandise available for purchase. Getting you inside the store is more than half the battle, so companies are happy to give deep discounts to a few people to lure in hundreds or thousands more to buy at regular prices.

If this sounds familiar, it should - it's the animating principle behind every Black Friday sale.

How to Ensure You're Saving

Especially when shopping for a big ticket item, there are strategies you can use to make sure a "discounted" price represents an actual discount:

  • Use Price Comparison Tools - Several websites and apps offer historical pricing of various products across different retialersretailers. For example, the Camel Camel Camel website allows you to enter an Amazon item's URL and provides its price history.
  • Be Wary of Anchor Pricing - Don't be swayed by high "original" prices. Research the typical cost of an item across different retailers to find its actual retail value.
  • Calculate the True Cost - When determining whether a deal is worthwhile, factor in shipping, taxes, and any subscription fees.
  • Be Mindful of Quality - Low prices on low-quality items aren't a good deal if you'll need to replace them soon.

The Takeaway

There's nothing wrong with a good sale. The key, however, is identifying when a sale is nothing more than an empty marketing strategy.

Before making a purchase, comparison shop to ensure the sale price represents a discount of the item's accepted market value. Do this, and you'll avoid questionable sales and marketing tactics.

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The Psychology of Selling

Learn the strategies salespeople may use to influence your spending decisions.
A couple shops for a new car.

In the world of retail, knowledge is power. When entering into a sales negotiation, it's crucial to remember that you're often not on a level playing field. Professional salespeople have honed their skills to understand the intricate psychology behind retail transactions, developing a repertoire of persuasion techniques and objection-handling strategies. Their expertise can give them a significant advantage in any deal.

In short, salespeople spend their lives selling - so they're often at a considerable advantage in any transaction. For them, closing a deal is second nature. To level the playing field, let's review some of the most common tactics that can encourage you to spend more than you had planned (or to spend at all).

The Base Rate Fallacy

Let's say you're in the market for a computer. A $500 model that meets your basic needs might seem appealing. But what if the salesperson first showed you a $700 model with similar features? Suddenly, the $500 computer looks like an incredible bargain.

This situation illustrates the base rate fallacy in action. Without knowing an item's intrinsic value, consumers are vulnerable to false comparisons. Overcoming this requires time and research to understand actual market values.

Limited Time Offers

"Act now! This offer won't last long!" Sound familiar? Companies often frame deals as too good to last, creating a sense of urgency. In reality, these "limited-time" promotions are designed to spur quick decisions, playing on the fear of missing out (FOMO).

Creating an Emotional Connection

Have you ever felt obligated to buy something after a salesperson went above and beyond to help you? This tactic leverages the principle of reciprocity – we feel compelled to return favors, even if they're part of someone's job.

Car salespeople, for instance, often display family photos in their workspace. This strategy humanizes them, making the transaction feel more personal and trustworthy. Once an emotional connection is established, it becomes harder to walk away without making a purchase.

The Allure of Exclusivity

Many consumers are drawn to products perceived as exclusive or rare. Manufactured scarcity creates a strong compulsion in buyers to act now - otherwise, their opportunity will be lost. This approach is particularly effective in luxury markets, such as high-end automobiles or personal items like jewelry or handbags.

Anchoring and Adjustment

Salespeople often start negotiations with a high price, knowing that subsequent offers will seem more reasonable in comparison. For example, if you walk into a jewry store and ask for an engagement ring, the first ring shown will often be the highest-priced ring in the store. This "anchoring" effect can lead consumers to spend more than they initially planned.

The Takeaway

Salespeople often know precisely which buttons to push to get consumers to spend. By understanding these psychological tactics, you can build immunity to sales pressure - and strike a deal on more favorable terms. Take your time, do your research, and don't be afraid to walk away if a deal doesn't feel right.

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Setting the Stage for Spending

How every design decision in a retail store is geared toward increasing sales.
A woman making a purchase from a clothing store.

Real estate agents have long known the value of baking fresh cookies before hosting an open house. The warm, inviting scent creates a homey atmosphere, and potential buyers can't help but respond to the cue. In the digital realm, online retailers have developed their own set of "cookies" - data trackers that create a personalized shopping experience.

Today, the art of enticing consumers to spend has evolved dramatically - every aspect of the shopping experience, whether in a brick-and-mortar store or online, is meticulously orchestrated with one overriding goal - to get you to spend as much as possible.

Let's take a closer look at how retailers set the stage for spending.

The Evolution of Shopping

In physical stores, every detail, from layout to lighting, is carefully planned. The familiar path through a grocery store that leads you past colorful produce, through tempting snack aisles, and finally to essentials like milk and bread is entirely by design. High-margin areas like florists and bakeries are typically encountered early, encouraging consideration before you've spent too much on lower-margin items. More expensive products are often stocked at eye level, while generic, low-margin items occupy the bottom shelf.

Online platforms have adapted and enhanced these strategies. E-commerce sites use algorithms to create a virtual journey through their inventory, strategically placing high-margin items in prominent positions and suggesting impulse buys based on your shopping history. The entire store seems to rearrange itself with each visit, placing the items you're most likely to buy right at your fingertips.

The Sensory Experience

Retailers have long understood that engaging multiple senses can significantly influence consumer behavior. Strategies they employ include:

Lighting the Way

Lighting plays a crucial role in setting the mood for spending in physical stores. Some clothing stores, like Abercrombie & Fitch, are known for their dim lighting, cultivating an exclusive, clubby atmosphere. Jewelry stores often use dramatic lighting to highlight certain pieces, enhancing their appeal.

Music to Their Ears

Music is an integral part of the modern shopping experience, carefully chosen to enhance mood and encourage spending. Bookstores favor quieter, slower-tempo music to relax buyers. At the same time, bars and restaurants opt for high-tempo, upbeat party music to excite patrons. Luxury goods stores typically choose classical music, leveraging its connotation of affluence.

The Power of Touch

The power of touch cannot be underestimated. Research has shown that consumers are 60% more likely to buy an item after touching it. This physical connection creates a sense of ownership, which is why retailers make products easily accessible, and car dealerships eagerly offer test drives.

Digital Sensory Engagement

While online shopping may lack the sensory richness of physical stores, digital marketers have found innovative ways to engage our senses. High-resolution images, 360-degree product views, and augmented reality try-on experiences aim to recreate the tactile aspect of shopping. Even sound plays a crucial role, with satisfying audio cues reinforcing positive shopping behaviors.

Personalization and Scarcity

One of the most significant advancements in modern marketing is personalization. E-commerce giants like Amazon and Netflix have set new standards in using data to tailor the shopping experience. AI-driven recommendation engines analyze vast amounts of data to create a uniquely crafted experience for each user, blurring the line between helpful service and persuasive marketing.

Despite the seemingly endless inventory of online stores, retailers have mastered the art of manufactured urgency. Limited-time offers, countdown timers, and low-stock notifications tap into our fear of missing out (FOMO). Flash sales and "deal of the day" promotions turn shopping into a game-like experience where speed and timing are crucial, often leading to impulsive purchases.

The Social Aspect of Shopping

Shopping has always been a social activity, and in the digital era, this aspect has been transformed through social media and user-generated content. Influencer marketing, customer reviews, and ratings now play a critical role in purchase decisions. Some e-commerce platforms have even incorporated social features directly into the shopping experience, making online shopping feel more communal and engaging.

To compete with these digital social experiences, physical stores adapt by hosting events, product launches, and workshops, turning shopping into an experiential activity that can't be replicated online.

Making Decisions Right for You

By understanding how the stage is set for spending, we can better decide when to participate as consumers and when to observe from the sidelines. This awareness allows us to enjoy the convenience and innovation of modern shopping while maintaining control over our spending decisions.

When shopping in-store, be mindful of sensory cues and store layouts designed to encourage spending. Online, take advantage of comparison tools and wishlist features to make informed decisions. In both environments, set a budget before shopping and be aware of tactics that create a false sense of urgency.

Remember, whether you're responding to the aroma of fresh cookies at an open house or the personalized recommendations in your online cart, your needs and financial goals should ultimately guide the choice to purchase, not the carefully orchestrated environment around you.

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Avoiding Unnecessary Add-Ons

How sellers convince buyers to pay for extended warranty protection they may not need.
A calm man reviewing a document and sitting at a desk.

"Would you like to purchase the extended warranty?"

Whether standing at a store counter or clicking through an online checkout, this familiar question marks the beginning of a carefully orchestrated upsell process. In today's retail landscape, the moment of purchase is no longer the end of a transaction - it's often just the beginning of a series of additional offers designed to increase your spending.

The Evolution of Add-Ons

Traditionally associated with big-ticket items like televisions or refrigerators, extended warranties and insurance plans have become ubiquitous. In the digital era, you might be offered an extended warranty on everything from a $20 phone case to a $2000 laptop. This proliferation has normalized these add-ons to the point where many consumers automatically include them without much thought.

Similarly, rebates have taken on new forms in the digital age. While mail-in rebates still exist, online retailers also use instant or cashback offers to incentivize purchases. Cashback apps and browser extensions have also increased, promising savings on every purchase but potentially leading to impulse buys.

The Psychology Behind the Upsell

To understand why these offers are so effective, we need to explore the psychology at play. When we make a purchase, especially a significant one, we experience a mix of positive feelings like anticipation and pleasure. However, we also experience anxiety and fear - worry that we've spent too much or that our new purchase will break or malfunction.

Sellers exploit these feelings when offering extra warranties or added insurance. People are loss-averse by nature, and this feeling is never stronger than when we first own a new item. This makes the idea of more protection extremely attractive, and retailers know how to leverage this desire to their advantage.

The mechanics of a warranty or insurance transaction often favor the seller. In a physical store, you're at the head of a line, naturally not wanting to hold people up. The online shopping experience is designed to make additional purchases as frictionless as possible - one simple click can add more money to the retailer's bottom line. This pressure, combined with our desire for protection, can encourage us to make ill-advised split-second decisions.

Moreover, many of these warranties and insurance plans don't add up financially. They may offer redundant coverage that overlaps with the free manufacturer's warranty or protections provided by your credit card. Or they charge so much for the added protection that you ultimately pay too much.

Making Decisions About Upsells

So, how can we make more intelligent decisions when faced with these offers? Here are some strategies to consider:

  • Do Your Research Ahead of Time - Before making a significant purchase, research the typical costs of repairs or replacements for the item. This step will help you assess whether an extended warranty or insurance policy is worth the cost.
  • Understand Your Existing Coverage - Many credit cards offer purchase protection and extended warranty coverage. Know what you're already entitled to before paying for additional protection.
  • Calculate the Real Cost of Rebates - If a rebate requires spending more to save more, calculate whether it's worth it. In addition, it can be easy to forget to mail in a form to claim the rebate.
  • Implement a Cooling-Off Period - When shopping online, consider leaving the site for a few hours or a day, then return with a fresh perspective to decide if you really need the additional coverage.
  • Be Wary of Limited-Time Offers - Many retailers claim that warranty offers are only available at the time of purchase. In reality, you may be able to add coverage later if you decide it's necessary.
  • Consider Self-Insuring - Instead of paying for warranties or insurance on multiple items, consider setting aside the money you would have spent into a "repair fund."

The Bottom Line

We can expect these upsell tactics to become even more sophisticated as technology advances. Artificial intelligence and machine learning algorithms are already used to personalize upsell offers based on individual shopping habits and risk profiles. Virtual and augmented reality technologies may soon allow us to "experience" the peace of mind that comes with additional coverage before we buy it.

While these advancements may make the shopping experience more tailored and convenient, they also underscore the importance of remaining vigilant and critical in purchasing decisions. Remember, whether in a physical store or shopping online, the best protection isn't always what's being sold to you - it's your own informed decision-making.

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When Free Isn't Really Free

The hidden costs attached to giveaway promotions.
A person makes an online purchase with a credit card.

There are few more attractive words in the English language than "free." After all, who doesn't love something for nothing?

Unfortunately, there are very few things in life that come with no strings attached and it's crucial to understand the hidden costs often attached to these tempting offers.

The Evolution of "Free"

The concept of "free" has evolved significantly in recent years. In the past, it might have meant a buy-one-get-one offer at your local supermarket or a free book with your magazine subscription. Today, "free" has taken on new dimensions, becoming a sophisticated tool for customer acquisition, data collection, and long-term monetization.

In-Store Freebies

Traditional retailers still use free offers to attract customers. You might encounter:

  • Free samples in grocery stores
  • Complimentary makeovers at beauty counters
  • Free trials of products or services

While these can provide value, they're designed to encourage purchases and build brand loyalty.

Digital Freebies

In the online world, "free" offerings have multiplied:

  • Free apps and software
  • Freemium services (basic version free, premium features paid)
  • Free trials of digital subscriptions
  • No-cost social media platforms

These digital freebies often have a less visible price tag: your personal data and attention.

The Real Costs of "Free"

Particularly with digital products, when something is offered for free, you – or, more specifically, your data – become the product. Companies collect vast amounts of information about your habits, preferences, and behaviors, which they can use for targeted advertising or sell to third parties.

For instance, a "free" fitness app might require you to input personal information like age, weight, and fitness goals. This data is valuable to advertisers and can be used to target you with related products and services.

The Attention Economy

In the digital age, our attention has become a valuable commodity. Many free services, particularly social media platforms, are designed to capture and retain our attention for as long as possible. This time spent scrolling, watching, and clicking translates directly into advertising revenue for these companies.

While we may not open our wallets, we're paying with time and mental energy. The constant stream of content, notifications, and ads can decrease productivity, increase stress, and even impact our mental health.

Negative Option Marketing

This tactic, often used in both physical and digital marketplaces, is particularly insidious. The U.S. Federal Trade Commission defines negative option marketing as any commercial transaction in which the seller interprets a buyer's failure to cancel an offer as an agreement to be charged for goods or services.

A classic example is the "free" book or music club. Upon enrolling, the consumer receives "free" items with no obligation to buy. However, unless the consumer takes action to cancel, they'll continue receiving – and being charged for – additional items.

In the digital world, this might take the form of a free trial that automatically converts to a paid subscription if not canceled.

The Freemium Trap

The freemium model, ubiquitous in the digital landscape, offers a basic version for free, with premium features locked behind a paywall. While this can provide value, it's designed to create a sense of limitation that nudges users towards paid subscriptions.

Consider language-learning apps or cloud storage services. The free tier might meet basic needs, but as users become more invested, the limitations become more apparent, encouraging upgrades to premium versions.

Making Informed Decisions

To make informed decisions in a world where "free" often comes with hidden strings, consider these strategies:

  • Value Your Data - Before signing up for a free service, consider what data you're being asked to provide and how comfortable you are with that information being used or shared.
  • Read the Fine Print - Take the time to understand the terms of service, particularly regarding data usage, future charges, and cancellation policies.
  • Be Mindful of Your Time - Reflect on how much time you're spending on free platforms and whether that aligns with your personal goals and values.
  • Explore Privacy Tools - Consider using privacy-focused browsers, VPNs, and other tools to limit data collection when using online services.

The Bottom Line

In both the physical and digital marketplace, "free" has taken on new meanings and complexities. While there can be genuine value in free offerings, it's crucial to approach them with open eyes. By understanding the actual costs - in data, attention, potential future payments, and even our mental well-being - we can make more informed decisions about which offers align with our needs and values.

Remember, when it comes to "free" offers, a healthy dose of skepticism can go a long way.

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Navigating the Subscription Economy

Subscriptions can be convenient, but it's important to make sure they provide ongoing value.
A happy woman changes the channels on her television.

In an era where convenience reigns supreme, the subscription model has emerged as the crown jewel of modern commerce. From streaming services and meal kits to software and even car subscriptions, the "subscribe now" button has become ubiquitous in our digital lives. As we increasingly embrace these recurring services, it's crucial to understand both their allure and the hidden costs that come with this new economic paradigm.

While the subscription model isn't new - newspapers and magazines have used it for centuries - the digital revolution has supercharged this business model, allowing it to permeate nearly every aspect of our lives. Someone may wake up to a workout video from a fitness app, brew coffee from a monthly bean subscription, commute while listening to podcasts on a premium audio app, and prepare dinner with ingredients provided by a meal kit service.

A study by Zuora, a subscription marketing firm, found that 74% of adults across 12 countries use subscription services. This proliferation has given rise to what's now known as the "subscription economy" to describe the shift from a product-based economy to one built on recurring services.

The Appeal of Subscriptions

The allure of subscriptions extends beyond mere convenience. These services offer a sense of discovery, introducing consumers to products they might not have chosen themselves. Many subscriptions appear cost-effective compared to one-time purchases, especially for frequently used items or services. Additionally, the exclusive access and members-only perks offered by many subscriptions create a sense of status and belonging.

However, the true genius of the subscription model lies in its psychological underpinnings. Once we have access to a service, we tend to value it more highly - a phenomenon known as the endowment effect. This, combined with our innate loss aversion, makes it challenging to cancel subscriptions, even when they're underutilized. Subscriptions also alleviate the burden of decision-making, appealing to those overwhelmed by choice in our option-saturated world.

The Hidden Costs of Convenience

While subscriptions offer undeniable benefits, they also come with less visible costs. The accumulation of small monthly fees across multiple services can quickly become a significant expense. A study by West Monroe found that the average American spends $237 per month on subscriptions, often underestimating this amount by $133.

Underutilization is another hidden cost. For example, a study revealed that those with gym memberships estimated they would visit 9.5 times per month - but actually averaged only 4.17 visits. This discrepancy between expected and actual use is shared across various subscription types.

In addition, subscription inertia leads many to continue paying for services they no longer use simply because they forget to cancel or find the process cumbersome. Subscription services often capitalize on this by making cancellation difficult or offering tempting discounts to users attempting to unsubscribe.

Price hikes present another challenge. Many services start with low introductory rates that increase over time, counting on customer inertia to maintain subscriptions even at higher prices. Netflix, for instance, has implemented several price increases since its launch, with most subscribers choosing to stay despite the higher costs.

Managing Your Subscriptions

To enjoy the benefits of the subscription economy while avoiding its pitfalls, consider the following strategies:

  • Regularly audit your subscriptions, canceling those that no longer provide sufficient value. For subscriptions with free trials or introductory rates, set reminders to review the service before the full price kicks in.
  • When possible, share subscriptions with family or friends to split costs. Be wary of long-term commitments, favoring monthly subscriptions over annual ones until you're sure of the value provided. Before subscribing, calculate the yearly cost and compare it to buying the product or service outright.
  • Consider rotating subscriptions instead of maintaining multiple similar services simultaneously. For example, you might subscribe to one video streaming service for a few months, then switch to another, allowing you to enjoy various content without ongoing payments to multiple platforms.

The Bottom Line

The subscription economy offers unprecedented convenience and access to a wide range of products and services. But it also presents challenges in managing costs and avoiding subscription creep. By approaching subscriptions mindfully and regularly evaluating their value, we can enjoy the benefits of this model without falling into its potential pitfalls.

The key to mastering the subscription economy is ensuring you get ongoing value from the service. Sometimes, the most powerful move is knowing when to hit "unsubscribe."

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