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Are Social Deal Sites (Groupon) Worth It?

“Social shopping” is gaining in popularity right now. Through web sites like Living Social [3] and Groupon [4], it is possible to get discounts on different products and services in your local area. Social deal web sites send you tips about which deals are available, and then you can go spend money, getting up to half off — or more — on different items.

One of the questions you have to ask yourself as you sign up for Living Social, Groupon or any other social deal site is this: Am I really saving money? Or are you just looking for a reason to spend it?

Spending Money is Still Spending Money

When you are spending money [5], no matter what sort of “deal” you are getting, you are still, in fact, spending money. While you can find some good bargains with social deal sites, it’s not as if you are putting that money into a high yield savings account or investing for the future. You are spending it. And, quite probably, on something you don’t need.

Before you get excited about saving getting $10 worth of frozen yogurt for $5, stop and ask yourself: Do you even want frozen yogurt? And how much frozen yogurt are going to get anyway? Going to a sweet shop to get a couple of scoops of frozen yogurt can be expensive. That $10 gift card (that you only paid $5 for) might only be enough for two dishes. You might be able to go to the store and get a half gallon of frozen yogurt for $5 — and it would provide more than two people with a delicious dessert.

Another issue you need to address is whether or not you would be spending money on that particular product or service if a deal wasn’t being offered. If you wouldn’t go buy that new pair of shoes anyway, the truth is that your social deal is providing you with an excuse to spend money that perhaps you should be using for something else.

What If You Will Use Your Social Deals?

Of course, social deals can be useful in some cases. My husband and I do a lot of shopping on Amazon. This includes buying our pasta, and a few other grocery items, in bulk. When a $20 Amazon promo balance was offered for $10, I signed up for a deal site just to get it. It saved us on the pasta order we made shortly thereafter. However, I have not used a social deal since then. The spa deal was tempting, but I’m not planning to get a spa treatment anytime soon — and even with the discount offered, the spa in question still cost more than the services I get at my local salon.

The key to making the most of social deals comes down, like so many things in personal finance, to honestly evaluating your needs and disciplining your spending. Like coupons for new products and services that you wouldn’t even think about getting under normal circumstances, social deals might not be the best option for you. Be choosey about which deals you spend money on, and make sure that your spending is part of your overall financial plan [6].

What’s your opinion of these local deal sites? Good deal or just a way to trick you into spending money on something you don’t need?