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Buying in bulk can be a great way to save money, as most people know. The unit cost per item is often substantially less when you buy in large quantities. Of course, it also means spending more upfront, which can be difficult if you’re already cash strapped.

Welcome to the catch-22 of finances. It takes money to make money, and it sometimes takes money to save money.

That conundrum was the focus of a recent working paper from the University of Michigan by A. Yesim Orhun and Mike Palazzolo, who looked at how often consumers at different income levels take advantage of bulk discounts. The researchers analyzed toilet-paper purchases made over a seven-year period by more than 100,000 American households. They said they picked toilet paper because it is “tailor-made” for their study: it’s often sold in bulk, at a discount and can be stored indefinitely.

As you might expect, high-income households ($100,000 or more per year) bought toilet paper on sale 39% of the time while low-income households ($20,000 or less) bought it on sale 28% of the time. Also, high-income households reportedly bought more rolls at a time, saving money on each roll as well as on travel costs to and from the store because they were able to make fewer trips.

“Low income households are less likely to utilize these strategies even though they have greater incentives to do so,” the study authors wrote.

Low-Income Shoppers Pay More

Because low-income shoppers don’t or can’t take advantage of sales and buying in bulk, they end up paying about 6% more per sheet of toilet paper than high-income households do, the study found. Lower-income households do, however, see a savings by buying cheaper brands, saving them roughly 9% per sheet. That still means about two-thirds of their savings are wiped away by their inability to use the bulk and sale buying strategies.

While a 6% difference may not seem like much, applied over multiple grocery items, it begins to add up.

Of course, having a vehicle to transport bulk purchases as well as a place to store them can also come into play, as can where these items are purchased — a corner store versus a discount warehouse or large grocery store, the authors pointed out, the latter two offering a greater cost savings.

How You Can Save

If you find yourself unable to afford buying in bulk, it might be time to take a look at your spending and saving habits. They might be very different from the habits of successful savers and investors. You can also consider ways to increase your income.

And while buying in bulk can be a cost-effective way to stock up on essentials, there can be pitfalls.

If you spend too much and accrue high levels of debt, for instance, it can hurt not just your wallet but also your credit scores. You can see just how much debt can cost you using our lifetime cost of debt calculator. (And you can see how your credit card balances are currently affecting your credit by viewing two of your credit scores for free each month on Credit.com.)

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Image: Agnieszka Kirinicjanow

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