Can a Costco membership really save you money? Here’s how to know:

Costco recently reported that its stores have a whopping 73 million members. If you hear your friends and neighbors going on and on about the benefits of Costco, you might be toying with the idea of ​​signing up for a membership yourself.

Costco’s basic (Gold Star) membership costs $60 per year. Executive membership costs $120, but in return you get 2% cash back on Costco purchases.

Of course, if this is your first time visiting Costco, it might make the most sense to start with a basic membership for $60 and take your items from there. But is a $60 membership really worth adding to your budget? There’s a simple way to find out.

Take a test drive

Unfortunately, Costco does not offer a free trial membership. However, Costco allows existing members to bring guests shopping. So if you want to know how much your weekly purchases cost at Costco, tag your friends or neighbors the next time they head to the store.

But what you’ll want to do ahead of time is make a list of the groceries and household essentials you typically buy on a regular basis. Then, when you go to the store with your friends, it might be a good idea to take note of the prices Costco charges.

I have more work to do because I want to compare prices at Costco to prices at my local supermarket. Costco tends to sell in bulk, so compare unit prices to get the actual equivalent cost. For example, find out the price per ounce for breakfast cereals commonly purchased at grocery stores and Costco. But once you run the numbers, you’ll basically know whether a Costco membership makes financial sense.

Let’s say you typically buy two gallons of milk, two cases of strawberries, deli meat, bread, cheese, and tortilla chips each week. If all the items cost $45 at your local supermarket and $40 for the same amount at Costco, you’ve got your answer. Saving just $5 on groceries every other week can save you $130 over a year. This is more than the $60 membership fee.

And remember, once you join Costco, you can get great prices on items you don’t buy every week, like clothing or electronics. So even if your weekly savings aren’t that big, you should know that a discount on one big-ticket item could cover the cost of your membership. For example, if your high school student needs a new laptop and you find one on sale at Costco for $499, and the cheapest price anywhere else is $599, the $100 savings could offset the $60 membership fee.

There is little risk

It’s definitely a good idea to compare the prices of products you regularly buy at the supermarket with the prices they charge at Costco. However, you shouldn’t stress too much about your membership not performing.

In such cases, you can cancel at any time and receive a refund. And just to be clear, you can still get a full refund if you used your membership for a month or so before deciding not to keep it. So, if you’re not sure about Costco, I recommend signing up because there’s very little financial risk.

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