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Living within your means is an extremely important life skill that too many people unfortunately lack. After all, less than half of Americans have enough money in savings to cover a $400 emergency. However, while spending your money wisely is critical, being too thrifty can actually harm your bottom line if you’re not careful. Therefore, before you spend on something important, here are five frugal mistakes that’ll cost you more in the end.
1. Cheap Insurance (or No Insurance)
It’s easier than ever to compare insurance rates these days, and it seems intuitive to select the policies with the lowest premiums. However, going cheap on your insurance can often cost you money if you ever need to make a claim on your automobile or homeowner’s policy. Low-cost insurance may not provide all the coverage that a slightly more expensive policy offers, leaving you more exposed to hazards than you’d be if you’d paid a few more dollars each month. It may have a much higher deductible, too. Worse yet, if you opt out of insurance coverage that’s not mandated on your home or business, you could pay dearly if something is damaged or stolen. Therefore, don’t go cheap on insurance; determine the coverage you need, and read the terms of the policies you’re considering. Otherwise, it may cost you big in the end.
2. Buying in Bulk
Warehouse-type stores are a fixture in suburban areas; most people live close to Sam’s Club, Costco, or another warehouse store where you can buy groceries and paper products in bulk. Buying in bulk isn’t always cost-effective, though. Depending upon the size of your household, you may not be able to eat all the perishable items you buy in bulk before they expire. This is a common problem; in a 2018 survey, about 35% of consumers indicated that many of their bulk food items go bad before they can eat them. Poorly planned outings to the warehouse store can lead to impulse purchases of food and household items that you never end up using, too. Plan all your trips to the warehouse store or you could end up spending too much.
3. Cheap Big-ticket Items
Big-ticket household items such as furniture and appliances can be expensive, and it’s easy to find heavily discounted items to purchase online or at outlets. However, going cheap on those items can cost you in the end. If you buy a heavily discounted appliance, such as a refrigerator, it may not be made as well or have the same features as an average-priced item; a cheap appliance may not have the same warranty coverage, either. Similarly, you use most of your key furniture items, such as your dining room table and bed, nearly every day. Cheaper items are more likely to wear out quickly, leading you to spend more on replacements. Additionally, dealing with shoddy, cheap furniture and appliances can impact your quality of life in a manner that’s difficult to measure in terms of cost alone. Therefore, shop carefully when it comes to furniture and appliances, since buying cheap items may end up being a costly mistake.
4. Skipping the Doctor and Dentist
We’ll avoid the “ounce of prevention” cliché here, but it’s true: avoiding the doctor and dentist can save you a lot of money, at least until it doesn’t! If you skip those routine checkups and dental exams, you may be saving money in the short term, but it could cost you a ton in the end. Preventative medical and dental activities help keep you healthy and detect problems in their early stages when they’re easier to correct. Saving money and time by avoiding routine doctor and dental appointments could leave minor issues undiscovered, until they grow into major problems that cost a fortune to address. Make sure you don’t skip out on those routine doctors and dental visits to save a few bucks; it’s just not worth it.
5. Couponing (Yes, Couponing)
Using coupons may seem like the apex of being frugal. However, couponing can end up costing you more in the end if you don’t use them wisely. In fact, a 2003 study found that people who used coupons ended up spending more money on average than people who shopped without them. It’s easy to understand how this can happen. People often purchase items they otherwise wouldn’t because they clipped or printed a coupon. Similarly, many people buy an item they have a coupon for, even if a similar item is available at a lower price. Therefore, if you’re a coupon fanatic, take a little time to analyze your shopping habits; if you’re not careful, using coupons may be causing you to spend more than you would otherwise.
Being frugal is great, until your thrift ends up costing you more money than you’re saving. So, before you get ready to pay for something, consider the advice here. Otherwise, that good deal you thought you made could end up costing you more in the end.