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Wise Buying - Homescience Form 3

Principles of Wise Buying

Buying is when a consumer exchanges money for goods and services. Wise buying is getting value for the money spent on goods and services.

Common Methods of Buying Goods and Services

The methods used for buying goods and services include:

  • Cash buying
  • Credit buying
  • Others may include electronic money transfer.


By the end of the lesson, you should be able to state the advantages and disadvantages of common methods of buying.

Cash Buying

This is when a consumer exchanges goods or services for money.


  • Consumers may get a discount on the buying price of goods or services
  • It prevents consumers from overspending
  • Discourages impulse buying
  • Enables one to follow their budget


  • Consumers can only obtain the goods and services when they have the money
  • Not suitable for expensive items such as cars due to the risk of carrying the money

Credit Buying

This is where goods and services are obtained with the promise to pay at a later date. Under credit buying, we have:

  • Hire purchase
  • Non-instalment credit
  • Credit cards

Hire Purchase

Hire purchase is also referred to as installment credit. In hire purchase, the consumer obtains a good, pays the agreed installment and may pay a deposit for it.


  • The consumer enjoys the use of the good before completing payment.
  • The consumer is given a guarantee and therefore receives other services like repair and maintenance before completion of payment.
  • The consumer obtains items that would otherwise take too long to save for.
  • The consumer does not strain financially as they pay in manageable amounts according to their income.
  • It encourages the consumer to plan income expenditure.


  • It is more costly than cash due to the interest charged.
  • Families may overspend due to buying many items.
  • One does not get any discount on items.
  • Incase of default in payment no refund given.

Credit Cards

This is a method where a consumer uses a prescribed card from a financial institution to buy goods and services and payment is made from consumer's account.


  • The consumer accesses goods or services during emergency
  • They are not bulky hence easy to carry
  • They are fairly safe
  • Can be used at all times
  • Some credit cards may give cash


  • They may lead to overspending
  • They may lead to impulse buying
  • There is high interest rates charged hence expensive
  • The card may not be used to obtain some goods and services such as vegetables from an open air market

Non-installment credit

This is where a consumer obtains goods and services with a promise to pay later with no interest charged.


  • One does not have to pay for goods and services immediately.
  • It eases financial pressure as it gives the consumer time to organize him/herself.
  • Does not attract any interest


  • Failure to pay may lead to denial of services
  • It does not allow for bargain in payments
  • One may over commit their income

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