Bartering: And Old but Good Financial Strategy

Bartering: And Old but Good Financial Strategy

Barter is the exchange of goods and services without using money. It has been around since 6000 B.C. but still has its place in society today.

One huge advantage is there are no taxes on barter.

If you have a valuable skill or a popular item, bartering can be a great way to get ahead financially.

Why would you want to barter goods and services?

Let’s be honest, money transactions can feel soulless and impersonal. On the other hand bartering has a kind of old world charm. It can be very satisfying to trade with a person you can look in the eye. Bartering can lead you to develop your bartering skills and build relationships that can be of benefit to you in the future.

What can you barter?

Bartering requires you offer up something, either in the form of your time or something you own.

The easiest thing to offer for barter is a specific service you are skilled in (e.g. your time).

Here are some examples of services you can barter:

  • Personal care services - haircuts, massages, tattoos, makeup artistry, etc. 
  • Household services - cooking, cleaning, childcare 
  • Yard work - lawn mowing, weeding, gardening, tree / bush trimming
  • Computer support - fixing computers, configuring printers, wifi, etc
  • Tutoring - including languages, music, school subjects, etc
  • Trade skills - electrical work, plumbing, painting, carpentry, etc This is by far the hottest item you can offer for barter and allows you to avoid a lot in taxes!

As for offering up things you own, you can theoretically barter anything, but you might not get many takers depending on what it is you are trying to offload. Online marketplaces can help you find someone to trade with.

Examples of items you can barter:

  • Clothes - many people have closets full of old clothes that they don't wear anymore, and they are sorry to throw them away. It is best to barter it with other people who have the same problem because they don't want to throw away practically new or slightly used clothes. It is best to agree on where you will exchange clothes and how you will do it.
  • Toys - children quickly grow out of toys and want to get something different. Instead of buying, you can barter with toys and your child can get other toys to play with.
  • Gifts and handmade items - this type of exchange is usually done before the holidays. If you know how to knit you may be able to trade with someone who makes cutting boards, etc. This can be a great way to get a variety of handmade gifts.
  • Home made foods - are you good at baking or pickling? If so you are in a good position to barter since good foods are always in demand.
  • Collectibles - anything that people collect can be bartered including baseball cards, vinyl records, cds, figurines, etc.

So how do you get started in bartering?

  • Face-to-face - personal barter is the sweetest because it is done on a local level and in general between people who are in a friendly relationship. You can even start a barter group to develop your exchange network and develop a friendly relationship along the way.
  • Buy-sell-exchange stores - one way to barter is to turn in old items for store credit. This is essentially bartering with a store vs an individual. The store takes a cut. The benefit is you don’t have to do as much work lining up individual transactions and you get the entire store’s inventory to choose from. This works especially well if you have kids as they constantly grow out of clothes and need new ones. 
  • Online via the Internet - to barter online, you can use social networks or apps devoted to it. For example on Facebook there are many private groups labeled as “barter” or "pay nothing",. There is also the popular Craigslist barter category. Bartering can certainly be done between strangers as well but carries risk (as does any deal between strangers). 

What are the challenges to bartering?

The drawback of bartering is it can be hard to equate the value of two different goods or services against each other. Back in 6000 B.C. this challenge was apparent. For example if you want a pair of sandals how many animal pelts is that worth? You can’t easily split an animal pelt, so that means you might get stuck having to trade two when one and a half would be a more accurate deal. Also if somebody shows up with a wagon load of sandals, suddenly all sandals in the village are worth a bit less since there is an oversupply… but that is ancient times. 

Subsequently coins and other forms of money were invented to solve these issues. Money has a big advantage since it is a universal store of value and can be split into small denominations (like pennies). Rulers also liked coins since they could control the supply and manipulate prices to their advantage.

Another issue with bartering is its scale. Generally, bartering is kept to fairly small transaction values (say under $50 or $100). You wouldn’t want to barter for something big like a car, unless you want to do a trade for equal value. Large projects involving hundreds of hours don’t scale well to bartering either. If a baker is offering someone to re-roof their house, there is a limit to the number of scones a roofer would want. There are platforms out there offering to barter large items like cars or real estate, but this seems pretty sketchy to me and there is a reason they are not catching on.

Conclusion: If you want to save money, save on taxes, and trade your skills / time / items for equal value bartering can be a great way to go!

The post Bartering: And Old but Good Financial Strategy is part of a series on personal finances and financial literacy published at Wealth Meta. This entry was posted in Financial Literacy
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