Do you pride yourself on being thrifty, consistently taking care to buy budget products, clip coupons, and shop at big warehouse stores? If so, give yourself a pat on your back—you are taking smart steps to protect your financial future. However, you should also be aware that always looking for the next bargain could instead lead you to spend more than you’re saving. Check out the following common mistakes to find out why—and what you should do instead.
Sweating the small stuff
It’s true you can save money by pinching pennies. But when skimping on everything in your life—including the coffee you drink, the food you eat, and the clothes you wear—makes you unhappy, being extra frugal may be more trouble than it’s worth. Instead, try to cut corners on a big expense or two that doesn’t mean as much to you. For instance, if you own a large home but would be perfectly happy living in a smaller one, you could downsize and then save or invest the amount you get back. Or if you go on a big, expensive overseas vacation every summer, maybe you could enjoy a less expensive but equally fun trip to a domestic locale this year. Another option to consider is not upscaling your lifestyle the next time you increase your income. By not automatically spending more when you get more, you can boost your savings quite a bit.
Taking too many discounts
If you find yourself buying things you don’t use or need just because you have a coupon for it, you’re losing cash instead of saving it. Instead, clip coupons only for products you buy and use regularly. The same goes for items on sale. If you purchase something only because it’s 50 percent off and not because it suits your needs, then that discount probably won’t help you.
Purchasing in bulk
Instead of always buying in bulk at once to save money, focus on the price per unit instead. That price is typically lower the bigger you go, but the opposite is sometimes true too. Always check the unit price for a product before purchasing it and think about whether you’ll be able to use all of it before its use-by date.
Always buying budget
Splurges can actually be thrifty in some circumstances. For example, it’ll cost less in the long run to spend one hundred dollars on boots that will last you ten years than to buy cheap ones for twenty dollars that will only get you through one winter. Conversely, if your search for discounts leads you to make purchases that are less than satisfactory, like when the inexpensive mattress you chose isn’t comfortable or the discounted appliance you bought breaks down often, you might want to reconsider how you shop.
Skipping preventive care
Sometimes maintenance service for your car or checkups with your doctor can seem like a waste of money—if it isn’t broken, why fix it, right? But skipping important preventative measures could be an expensive mistake if, for example, those missed dental cleanings lead to serious dental problems or skipped oil changes causes your car to break down.
Skimping on insurance
You might be tempted to forgo insurance or certain coverages especially if you’re generally healthy. If you fall ill or need emergency care, however, that decision to pocket a few extra dollars every month could wind up costing you thousands. Instead, consider protecting yourself by getting a plan through your employer, especially if they’ll pay for a percentage of your premiums. Another option is to apply for health insurance through the health insurance marketplace at Healthcare.gov; which could also make you eligible for a tax credit that would lower your insurance costs. Some states run their own health-insurance marketplaces, so check if yours does.
This same principle applies for dental, auto, and home insurance—it’s a good idea to protect yourself in case anything goes wrong. As with any financial decision, consult with a professional and do your research before proceeding. You wouldn’t want to purchase more insurance than you need or pay more for premiums than necessary.
It always makes sense to save money for your future. But to make sure you’re using methods that make the most sense for you, be sure to consult with a financial professional.
This article was prepared by ReminderMedia.
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