Does Bulk Buying Make Sense? Here's What Mark Cuban Says

Bulk buying pays off in some situations. Is it right for you?

There's a reason warehouse clubs like Costco are so popular among consumers. A modestly priced membership could set the stage for big savings for those who are willing to load up on bulk purchases.

Similarly, programs like Amazon Prime make it easy to procure items in bulk. Often, doing so requires a bit more of an outlay upfront. But in exchange, you could reap a lot of savings on the items you're buying.

Still, in some cases, buying in bulk can be a bit of a gamble. And it's important to proceed with caution when going that route.

Billionaire and Shark Tank personality Mark Cuban has some good advice for buying in bulk. And it's worth taking it to heart the next time you start running low on household essentials.

Buy in bulk -- but only when it's a sure thing

Cuban insists that buying in bulk is a smart move because it can save you a lot of money. But he also says you should buy in bulk if it's money you're absolutely going to spend, no matter what. If you're not sure about a given item, you may not want to load up on mass quantities of it.

So, say there's a cereal brand your whole family loves, and a serving normally costs $0.50. If buying that cereal in bulk knocks your cost down to $0.25, it's worth going for it. Yes, you may have a larger credit card bill upfront. But as long as you can pay that bill by the time it comes due, you'll end up saving a lot of money on your breakfast needs.

To be clear, though, in this situation, you're loading up on an item you know you buy regularly. It's also not a particularly perishable item. Sure, cereals can get stale over time, but they generally offer a pretty reasonable window for consumption. And so all in all, in this scenario, buying in bulk is a pretty safe bet. Plus, you can stick a cereal box anywhere -- in your pantry, on your kitchen counter, and so forth. You don't need to carve out fridge space.

On the other hand, you may not want to take a chance on a bulk item you don't use regularly, or one with a shorter lifespan. Take eggs, for example. You might get a month to use them up before having to worry about them spoiling. But if you buy a 48-pack of eggs and you don't eat eggs on a regular basis, you might end up dumping some of those eggs, thereby wasting your money.

Here's another trap you might fall into. Say your kids love a certain chicken nugget brand, so you buy a bulk package of it. What happens if you simply can't fit it into your freezer because it's enormous? Even though it's an item you know your kids would eat, you may not have room to store it.

Make the right call

If you're tempted to buy something in bulk, ask yourself these three questions:

1. Will I use this item up by its expiration date?
2. Do I have a way to store this item properly?
3. Can I afford the higher upfront cost?

If you can answer yes to all three, you're good to buy in bulk. Otherwise, you may want to purchase a smaller quantity -- even if it means missing out on potential savings.