Why a Costco Membership Is a Smart Financial Move for Families

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If you’ve been thinking about a Costco membership but aren’t sure — maybe you think you don’t need to buy all those products in bulk, or you’re overwhelmed by the sheer size of the warehouse — you might want to reconsider when you realize all the ways you can save. The more people you’re shopping for, the more likely you are to see those savings add up, and the more you’re going to need them. Bigger families may reap bigger benefits, but even small ones will feel the savings on items you use every week or every day.

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Not Just a Food Store

First of all, if you think of Costco as simply a bulk foods warehouse, you’ll be astonished to discover that they sell a whole lot of everything. You can purchase everything from clothes to electronics to jewelry, and even housewares and foods such as fresh meats, produce and cheese. And that’s merely scratching the surface. You’ll save time, gas and planning by hitting up Costco’s one-stop-shop convenience.

Make Your Money Work for You

Lower Mark-Ups

Warehouse retailers like Costco tend to have a smaller mark-up on products than other smaller retailers, according to The Motley Fool, so they can pass the savings on to consumers in the form of lower prices. Michael Clayman, editor and writer at Warehouse Club Focus, told The Motley Fool that club merchandise mark-up margins range from 12%-14% compared to the 25%-50% margins in traditional stores.

Apartment Therapy compared prices between Costco and Target for household goods back in 2018 and found that in almost all categories — from toilet paper to paper towels, dish soap to toothpaste — the savings ran in Costco’s favor. Even if you’re only saving a few dollars on most products, those savings can add up quickly depending on how much you shop there. Just imagine all of the places you could put those savings to use!

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Ten dollars per month in savings could pay for extra gas in your car, or school supplies for your kids. Fifty dollars a month in savings could go into an emergency or college fund for aspiring children. One hundred dollars per month could go toward the purchase of a new car, vacation or holiday shopping.

Make Your Money Work for You

The current basic membership at Costco is $60 per year. In order to make that money back, you only need to save a little bit more than $1 per week, according to the Kitchn blog. Just buying eggs, milk and gas alone is enough to earn back that $60 fee.

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A Wide Range of Savings

A Costco membership allows you to save way outside the household goods box. You can take advantage of incredible prices and discounts on such things as cell phone packages, gas, water delivery, theme park and other vacation packages — or even car insurance and mortgages!

Buy Your Meds Here

One of the most common, expensive out-of-pocket prices that consumers pay for is prescription medications. Costco has a solution for that, too, offering lower prices on numerous medications — generic and name brands — through its pharmacies. For instance, a 90-capsule bottle of the nerve pain medication Neurontin (Gabapentin) wins the price war hands down at Costco, selling for just $10.48 — beating out Walmart and Target. The same bottle costs as much as $43.87 at Rite Aid, according to cost comparison site SingleCare. That more than $30 savings could go into a Health Savings Account or be spent on other forms of self-care such as a massage.

Make Your Money Work for You

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Look For End-of-Summer Sales

Costco also has a number of sales to bring their already lower prices down further. Check out end-of-summer sales, according to Business Insider, when seasonal prices are marked down to clear out certain products like patio furniture and summer clothing.

Kirkland Brand Is Cheaper

Costco has its own brand, “Kirkland,” which offers a lower price tag on a number of products ranging from food and beverages to home goods. You will inevitably save money when you buy this brand over the name brands.

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Utilize the Generous Return Policy

If you are unhappy with something you’ve purchased at Costco, even if it’s already opened food, the chances are high that Costco will take it back and give you a full refund. This policy alone makes shopping at Costco worth the price of membership.

Apply Discipline

Of course, you’re only going to earn these savings if you are careful in your shopping. This is why it’s vital that you use your membership perks wisely by only purchasing what you truly need and not wasting anything.

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Last updated: July 19, 2021

About the Author

Jordan Rosenfeld is a freelance writer and author of nine books. She holds a B.A. from Sonoma State University and an MFA from Bennington College. Her articles and essays about finances and other topics has appeared in a wide range of publications and clients, including The Atlantic, The Billfold, Good Magazine, GoBanking Rates, Daily Worth, Quartz, Medical Economics, The New York Times, Ozy, Paypal, The Washington Post and for numerous business clients. As someone who had to learn many of her lessons about money the hard way, she enjoys writing about personal finance to empower and educate people on how to make the most of what they have and live a better quality of life.


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