by April Lewis-Parks
You’re a frugal person and recognize that paying your bills and keeping balances low is the best way to save money in the end. You may even have a few savvy spending strategies that are guaranteed to keep more money in your purse. For example, cancelling your gym membership and only buying clearance items is a great way to put more money into savings, right. Yes, but at what cost?
It’s great to think about how your short-term spending decisions will affect your wallet, but it’s equally important to think about how they impact your long-term finances and quality of life. There are several spending habits some Americans adopt in an effort to save money that come back to bite them – and their wallets – in the end.
1. Buying the cheapest products
The saying, “You get what you pay for” holds true for a reason. Sure, you don’t need a $300 top-of-the-line mixer if you bake cookies twice a year. However, if you plan to get a lot of use out of it, buying a $5 mixer at your local Dollar Store is not a sound investment. The same holds true for shoes, clothing, appliances and household objects. Choosing a quality item that may be pricier can actually save you money in the long run, because you won’t have to go out and purchase a new one or have it repaired a month after your purchase. To get a good deal, read reviews to find out which products are of good quality and comparison shop with different in-store and online retailers.
2. Buying packaged food and cancelling your gym membership
It can cost a pretty penny to stay healthy, and it’s easier and cheaper to buy processed “health” foods and close your gym membership. However, the long-term health effects of living a sedentary lifestyle and living off of prepared meals can catch up with your wallet down the road. Over time, you may pay higher health and life insurance premiums and take more frequent trips to the doctor. Not only can these habits lead to several diseases and conditions, but they can also wreck your self-esteem and sense of well-being.
3. Hoarding cash
The stock market is volatile, bank fees are increasing and the job market is uncertain for many people. These conditions may even want to make Warren Buffett hide his money under his mattress. But when you’re in your 20s, 30s, and 40s, you should be focusing on growing your wealth for life events and retirement, rather than squirreling away cash. Even investing in a low-rate certificate of deposit makes better financial sense than keeping money out of the bank or stock market. During these years, you can afford to take on more risk and increase your net worth. While you should never take on an investment that makes you uncomfortable, putting some of your hard-earned money into a low-risk fund to start growing your balance is a smart idea.