If you’ve ever browsed the Internet for money-saving tips, you’ve probably come across “money hacks” that seem a little ridiculous, albeit harmless. Though many of these extreme savings tips might simply be ineffective, there are some cheapskate habits that can actually end up costing a pretty penny.
Here are some not-so-smart money moves that can cost you big time. (tweet this)
1. Buying Only Cheap Things
In his Discworld series, author Terry Pratchett had his character Sam Vimes theorize about why it is that poor people ended up spending more money for goods than the rich:
“A really good pair of leather boots cost fifty dollars. But an affordable pair of boots, which were sort of OK for a season or two and then leaked like hell when the cardboard gave out, cost about ten dollars. …But the thing was that good boots lasted for years and years. A man who could afford fifty dollars had a pair of boots that’d still be keeping his feet dry in ten years’ time, while the poor man who could only afford cheap boots would have spent a hundred dollars on boots in the same time and would still have wet feet.”
You don’t have to pay full retail price to get high-quality goods (in fact, at BLINQ, we discourage it!); however, if you only ever buy cheaply made things, you will end up paying for them over and over again.
Tip: Before you buy the cheapest version of whatever it is you need, ask yourself if it’s a good value. Maybe a good open-box or refurbished deal on something of higher quality is the smarter purchase.
2. Buying Things Only Because They’re Cheap
What’s the difference between “only buying cheap things” and “only buying things because they’re cheap”? In the latter case, the un-savvy shopper sees a sale on an item and buys a ton of them because of the awesome price … without regard to whether that item is actually needed.
Shows like “Extreme Couponing” highlight the lives of people who seem like they’d be equally at home on an episode of “Hoarders.” A lot of these characters seem to spend hours clipping coupons and shopping for hundreds of items at a time in order to save what seems like an impressive amount of money. There’s always a scene in these shows where you can see their impressive grocery and toiletries haul neatly organized in the garage — which looks like a mini grocery or convenience store itself.
So what’s wrong with that? If you can save 65% on cans of tuna fish, why wouldn’t you buy 50 cans? Because at some point, all that food is going to go to waste — either because it’ll go bad or because your family will be sick of tuna fish. Not to mention all the clutter you’re creating to store the unnecessary stuff, and the opportunity cost of lost time. Before you buy 50 cans of tuna fish (or whatever you’ve got that BOGO coupon for), ask yourself “Do I actually need or want this?”
Tip: No matter how little something costs, if you can’t think of why you want the item or how you might use it, go ahead and pass on that deal.
3. Cheaping Out on Preventative Maintenance
Have you ever put off paying to fix something, only to have it backfire on you? Maybe you think you can’t afford to spend money to fix your broken or underperforming doodad. But ask yourself: can you afford not to fix it?
In 2011 (when the recession was front and center in our lives), a whopping 40% of respondents to a Consumer Reports survey said they had put off car repairs they knew they needed to make. And of those people, 44% admitted that they felt the value, safety, or reliability of the vehicle would suffer.
The problem with deferred auto maintenance isn’t just that you’re compromising your safety — and the safety of those around you. The problem is also that failing to fix the issue is going to make your issues worse! Putting off a $500 repair today could end up costing you thousands of dollars in a couple of months.
People do similar things with their health (avoiding going to the dentist until it’s an emergency), with their homes (not replacing appliances while they can still comparison shop and then experiencing catastrophic failure)… and in their relationships (but that’s another story).
Taking good care of your things, including performing necessary maintenance, helps extend the life of that stuff — which is a good way to get more value out of your purchases, as well as preventing catastrophic (and dangerous) consequences.
Tip: Always include some buffer in your budget for foreseeable maintenance costs, and a minor repair won’t turn into an emergency.
How to Save Money… the Smart Way
Savvy shoppers think about the value of their purchases, not just the immediate bottom-line cost to purchase an item. And while they know when and where to find the best deals, they avoid buying junk they don’t need or want.
Have you ever regretted being a cheapskate? Share your story in the comments.