7 Money Saving Tips That Actually Don’t Pay
Beware these common money missteps: It's easy to fall into the trap of saving only to have it cost more weeks, months, or years later.
by Paul Michael (from wisebread.com) from Reader's Digest Magazine | May 2012
1. Getting suckered into buy-one-get-one (BOGO) deals.
BOGO, when it’s genuine, is hard to resist. but even then, whether it’s BOGO free or BOGO half price, you have to stop and ask yourself, Would I really have bought this much of this item at this price anyway? If you’re shopping for jam and see BOGO free on jam, that’s probably a great time to stock up. But if you’re looking for a new pair of sneakers and see BOGO half off, stop and think. You went out looking to spend $60 on sneakers. Now you’re spending about $100 after taxes. Did you even want two pairs? Will you wear them both? Do you even like the second pair?
2. Building an emergency fund but not contributing to a retirement plan.
It’s essential these days to have an emergency fund. Financial experts say you need six months’ to one year’s worth of expenses. But experts also agree that you need to look after your financial future. If you’re squirreling money away into an emergency fund or savings account but not putting money into a 401(k), IRA or other long-term plan, you’re not preparing for something you know is coming: old age. And with compound interest being what it is, every day you put it off is dollars wasted. If your employer has a 401(k) match, that’s additional money you are throwing away.
When it comes to saving, the simpler, the better. And what could be
simpler than "The $5 Savings Plan," i.e. stashing every $5 bill that comes your way? It’s a
surprisingly effective way to put some money aside. A Boston Globe
writer who stuck with the plan saved $12,000 in three years. That’s a
lot of Lincolns. (Source: lifehacker.com, mommysavers.com)
3. Always choosing the cheapest price tag.
I’ve said it before, I’ll say it again—buy cheap, buy twice. If you buy a screwdriver set for $1 at a dollar store, or get your shoes for a few bucks at a flea market stall, chances are you’ll be buying them again real soon. Cheaply made, poor-quality items may save you a few bucks in the short term, but you’ll only have to pay more later to replace them. And if you replace them with more cheap junk, you’ll be repeating the cycle. The only time this is not true is when you’re buying generic brands in the grocery store—you’re often getting the same product that’s in the brand-name packaging.
4. Taking store credit card offers for discounts but paying the minimum.
That 30 percent off is a good deal, if you actually pay off the balance in full right away. Sadly, many people find it way too easy to pay the much smaller minimum payment. Before long, you’re paying the minimum every month and adding more to the store card, and you’re suddenly a credit card revolver who is paying hefty interest charges.
5. Putting no money in the parking meter because “I’ll be back quick!”
You may be a world-class speedy shopper or errand runner, but everyone’s luck runs out sometime. Chances are you’ll eventually get a ticket, which can run you anywhere from $10 to $65, depending on where you live. So go ahead, spend a quarter.
6. Buying food in bulk and throwing half of it away.
When you see a whole bunch of bananas on sale for less than half the regular price, you grab them. Then you watch them turn black because you bought too many. While buying in bulk is good for lots of things, be careful when buying perishables. It’s not a bargain if you throw them away.
7. Avoiding regular visits to the dentist.
It’s something I did in college when money was tight. Well, after skipping regular cleanings and check-ups for a few years, I needed a bunch of costly fillings. Now I have a dental plan that covers free check-ups twice a year, but even if you don’t, get to the dentist. It’s a lot better to pay for an office visit now than to pay for major work later.