3 Ways Your Costco Membership Might Wreck Your Finances

For many people, a Costco membership can be a great way to free up more cash for your savings account. The $60 you spend on an annual basic membership, or the $120 you spend on an executive membership, could more than pay for itself when you factor in the amount you save during the year on expenses like groceries and household essentials.

But if you're not careful, your Costco membership might end up hurting your personal finances instead of helping them. Here are some reasons why that might happen.

1. You might assume everything is a great deal

Because Costco is known for its super low prices, you may be inclined to assume that every item you see at Costco is the cheapest version available. That's not necessarily the case. If you do your research, you'll often find that there's a better deal to be had on specific items at your local supermarket, or even your local big-box store.

The problem is that your Costco membership might drive you to not do that research. You might figure that since you're paying for a membership, you might as well use it, and that since Costco has a reputation for great prices, you're getting the best deal there. But if there's a better deal elsewhere, you might spend more than you have to by getting every item on your list at Costco.

2. You might throw money away on bulk food you don't consume

A big reason there's so much savings to be reaped at Costco is you'll generally get a discount by buying in bulk. But in that case, you're only going to come out ahead financially if you fully consume the grocery items you bring home.

The danger of buying food in bulk is that it might go bad on you before you get a chance to finish it. And from there, you risk throwing your money away via food waste.

This isn't just an issue with perishable food, either. You indeed have to be extra careful with items like produce, meat, and dairy products, all of which can have relatively short expiration dates. But even shelf-stable products don't last forever.

Also, sometimes, even if a product's expiration date is months away, once you open a package, its freshness begins to decline. If you're not careful, your Costco membership might prompt you to buy items in bulk that you don't need such large quantities of.

3. You might buy non-food items you can't afford while grocery shopping because they're all under the same roof

There's a running joke that it's impossible to walk into Target without spending at least $100 because there are so many fun buys you're likely to be tempted by. Well, the same concept could apply to Costco, too.

When you go grocery shopping at Costco, you're entering a store that doesn't just sell food and household cleaners. You're entering a massive warehouse where you can buy everything from clothing to toys to a new TV.

You may be inclined to spend money on extra items you can't afford because you see them in front of you on the way to the checkout aisles. And while this same risk exists when you go food shopping at a big-box store, you don't run the same risk when you stick to a traditional supermarket.

If you use your Costco membership wisely, then it has the potential to save you a lot of money. But if you're not careful, your membership could hurt your finances. So if you're going to keep shopping at Costco, research prices to make sure you're getting good deals, limit your bulk grocery purchases to items your household eats regularly, and shop with a list so you're less likely to wander into random aisles and come home with extra products you weren't supposed to buy.