Are you living frugally so that you can save some extra dollars? Surely it does help you live within your means. But, frugality is not just about saving money, it is about making good financial decisions that can help you save over the long haul.
Unfortunately, spending money wisely is an important life skill that many people lack. Worse being too thrifty can harm your bottom line if you are not careful. Here are a few thrifty shoppers’ missteps that can end up being the antithesis of frugality. Avoid them as there are some cases where it does not always pay to go for the lowest possible price.
1. MISUSING COUPONS
Using Coupons is great and may seem like the apex of being frugal. However, couponing can end up costing you more money in the end if you do not use them wisely. A 2003 study found that customers who used coupons spent more money on average than those who shopped without them. It is not difficult to understand how this can happen. People often buy items that they would not buy otherwise, just because they have clipped or printed a coupon and end up cluttering their kitchen with grocery items that they may not require. Therefore, if you practice extreme couponing takes a little time to analyze your shopping and clip only the coupons you require. Secondly, it is not efficient if you are spending hours driving around town to five different stores and stocking up. Chances are the savings are not worth the time and gas money.
2. BUYING IN BULK
The per-unit cost of an item at warehouse-type stores like Costa and Sam’s maybe less than the grocery store when you buy them in bulk. However, buying in bulk is not always cost-effective. Depending on the size of your household you may not be able to consume all the perishable items before the expiry date on the label. Plan your trips to the warehouse store to avoid impulsive purchases of food and household items that you never end up using. Otherwise, you would wind up losing a significant amount of money.
3. GETTING ENTICED WITH THE WORD “FREE”
It is human nature to be enticed with items that are offered free of cost. It is one thing to go for free promotion with no prerequisites like Ben & Jerry’s free ice-cream on Free Cone day (on the second Tuesday of April every year). But, remember that very rarely things come for free in this world. So, beware of hidden costs when you come across buy-one-get-one-free deals or ‘free shipping with $150 purchase”. It is usually pure marketing gimmicks to get us to spend money we really should not and maybe buy two of the similar things that we have not budgeted for.
4. CUTTING CORNERS ON INSURANCE
These days it is easier to compare insurance rates and it is intuitive to select policies with lowest premiums. However, low-cost insurance may not provide you with all the coverage that a bit more expensive policy offers and expose you to hazards. These policies may have higher deductibles too.
Secondly, you may have opted for the bare minimum level of auto coverage, signed up for mediocre health, dental, homeowners or life insurance. Or, maybe even raised your deductibles though you do not have enough money in the bank to cover the costs before your insurance is due. You may have done all this to keep your premiums low. However, if emergency crops up your wallet and your bank account could be knocked down by the out-of-pocket costs and sky-high deductibles.
5. SKIPPING ROUTINE MEDICAL VISITS.
Have you heard the famous cliché “an ounce of prevention is worth a pound of cure”? You must keep this in mind when you are tempted to skip the routine check-ups and dental exams. Even if you are concerned about doling out cash for meeting deductibles or co-pays. You must remember that preventative medical and dental activities help to keep you healthy and detect problems in their early stages when it is easier to cure. Minor issues if undiscovered can grow into major problems that will cost you a fortune to address. So, skipping out on those medical and dental visits to save a few dollars is not just worth it.
6. DIY PROJECTS
When there is work to be done on your car or home, it is very tempting to go the DIY route. After all, why should you pay someone tons of money if you can just buy the tools/or parts and do it yourself? But, sometimes it is just cheaper to pay a professional, especially if you do not have the serious expertise or the know-how needed to do the job. Otherwise, there are chances that you will mess up and will have to call a pro to undo the damage and that will cost you more money. Some examples are carpeting or re-flooring your home, estate planning and changing your car’s oil.
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