Saving money is a noble goal. It can even become addictive, like a game. But if you’re not careful, your savings strategies might lead you to spend more money in the long run.
These seven stories will help remind you to always keep your long-term savings goal in mind. That way you aren’t blindsided by short-term “savings.”
Who hasn’t been enamored with the “Extreme Couponing” TV show, where people get carloads of groceries for free? They make coupons seem like the equivalent of cash dollars — but the only way you can use those dollars is to spend money first. This sets up a snag where overzealous consumers can easily be tricked into spending more money than they otherwise would have in the quest of using the Holy Coupon and their “savings.”
Kendal Perez, a savings expert with Coupon Sherpa, has some tips: “Coupons, Groupons, and vouchers of any kind that save you money on products, services, or experiences you wouldn’t otherwise be interested in are ones you should stay away from. Instead of clipping ‘interesting’ coupons from the Sunday circular or browsing Groupon when you’re bored, look for coupons on items you already intend to buy.”
Trying to save too much money
Joseph Hogue, a chartered financial analyst and personal finance blogger, was in a familiar trap in his first professional job: He hated it and wanted to leave. So he tried saving up all of his cash so he could retire early.
“I fell into the financial equivalent of yo-yo dieting,” he says. He would take on as much work as possible before becoming burned out and blowing all of his hard-earned money in a spending spree.
He learned the hard way that it’s not enough just to make and save a ton of money. You also need to pace yourself, set realistic goals, and reward yourself along the way. Hogue’s advice? “Find something outside of work you enjoy doing to make all the effort and saving worthwhile.”
Growing your own vegetables
Growing your own vegetables doesn’t seem like it would cost much money. Just throw some seeds in the ground and add water, right? Wrong.
Once you factor in everything you need to grow a garden — tools, soil amendments, fences, plants, hoses, etc. — costs can quickly spiral out of control. Still, you have to be careful about cutting corners. Joshua Crum, a personal finance blogger, found this out firsthand when he forgot to include wild-animal-proof fencing in his calculations. “I spent around $100 and tons of work on a garden. Wild animals came and ate everything I planted.”
If gardening is your thing, see if you can reduce your expenses by buying used equipment instead of new. Also consider planting cost-effective vegetables for the maximum return for your buck.
Not reading the fine print on a purchase
There are a ton of ways to save money if you keep your eyes open. Receipt-scanning apps, rebates, sales, coupons, store loyalty cards — it’s a long list. The catch is that you have to carefully read the fine print so you can meet the requirements. Before you make a purchase with the intent of getting a rebate or some other discount, make sure you understand the terms and will actually benefit from the deal.
Mindy Jensen, community manager at BiggerPockets, recently found this out. She bought a ream of paper, expecting to use a rebate to have another free ream of paper shipped to her house. “I didn’t read the fine print, and the return was in the form of a store credit. I almost never shop there, so it was kind of a waste.”
In another incident she bought a bottle of alcohol specifically for a $5 rebate. “I have gotten in the habit of saying ‘No, thank you’ to receipts at the store, to save paper and the environment.” When she got home, she was stunned: “Guess what you need in order to get the rebate? A receipt. Of course, I felt like an idiot for not getting the receipt; having a proof that you purchased the product is a basic tenet to getting a rebate.”
Skimping on insurance
No one likes paying their monthly insurance premium — until it comes time to make a claim.
According to Neil Richardson from the auto insurance comparison site The Zebra, getting just the minimum liability protection for your state “is simply too little financial protection to cover a number of common car insurance claims scenarios. People end up with huge bills because they wanted to save a few dollars off their premium.”
MagnifyMoney recommends checking what insurance options are available with your insurance broker. Ask yourself: Would you be able to fully cover the cost of any unfortunate events outside of the minimum coverage? If not, you might need to reconsider your insurance coverage.
Skipping doctor visits
Going to the doctor is about as fun as stubbing your toe, not to mention being expensive. It’s pretty tempting to save some money by diagnosing yourself over the internet. Sometimes this works out, but it can have costly consequences if it doesn’t.
Abigail Perry, a personal finance blogger, once felt a urinary tract infection coming on but decided to treat it herself. It quickly turned into lower back pain, which was her signal that it was becoming more serious. She eventually ended up spending $75 to go to the emergency room, when a visit to her regular doctor would have had a $0 copay.
Perry’s advice is to “just go to the doctor. And if you can’t get an appointment there, find an urgent care clinic [rather than going to the emergency room, if possible]. Just be sure to bring a good book and a charge cord.”
Buying in bulk
Smart shoppers know that the best way to save money is by looking at the per-unit price of each food item. This often means buying food in bulk. Even smarter shoppers know to take into account an item’s shelf life, so they can plan to use it before it goes bad.
But there’s more to it than that, like making sure you actually need what you’re buying. For example, Lisa Torres, a retired high school teacher, buys several boxes of Popsicles at a time when they go on sale during the hot New Hampshire summers. Buying Popsicles in bulk seems like a logical choice, because she’s going through a lot of them and they’ll keep for months. But Torres also likes buying fresh fruit in the summer, when some of her favorites are in season. When her family has both options as a snack, they tend to choose the Popsicles.
“The healthy fruit in the fridge goes bad because we are eating Popsicles instead of fruit,” she says. “And next week I have to buy more Popsicles.” Torres says she’s still working on making better buying decisions so she doesn’t waste food or money.
When buying in bulk, it’s always best to stop and think about whether you’ll be able to use all of the product, as well as if you have any alternatives at home. By keeping tabs on what you have at home and taking a minute to think before every purchase, you can successfully navigate these common savings pitfalls.