Committing to making a budget—and sticking to it—is a big step toward improving your financial health.
But if your new efforts involve cutting expenses and being more frugal you’ll want to be sure your efforts to save aren’t costing you more money in the long run.
It might seem counterintuitive that a frugal lifestyle could cost you money, but it can. In fact, it is possible to try do everything right—and get everything wrong— when it comes to saving money.
Here are five ways being frugal can cost you money, and how to avoid getting stuck in the trap.
Food costs add up quickly, especially if you’re feeding a family with growing kids. And those coupon circulars in the Sunday newspaper or online can seem like a great way to save on the food and supplies your household needs.
But here’s the catch: When you get caught up in the “deals” and buy items that you don’t normally use just because it’s a deal, you aren’t saving money. You’re spending money on something you otherwise wouldn’t buy.
When using coupons, follow these rules of thumb. Only use coupons for items that are on sale unless it’s something you use daily or weekly. And only buy what you’ll need to use over the next couple of months. Don’t buy, for instance, a dozen sticks of deodorant just because you have a great coupon.
You may have visions of paying off all your debt in the next year, but don’t be unrealistic about how you’re going to get there. If you build a budget that’s so frugal you’ll never be able to follow it, you’ll only get frustrated and quickly revert to your old spending habits. For example, don’t plan on cutting your food budget in half immediately. Don’t expect to go cold turkey on new clothes purchases for your growing kids. Don’t cut your entire entertainment budget.
Instead, find ways to shave those expenses down at first. Reduce your grocery store bill by 10% or 20%. Shop a consignment store for summer clothes for the kids. And build into your budget a few dollars to watch a movie at home instead of at the movie theater. Once you’ve cut back a little bit, you can determine if you’re able to reduce your spending a bit more.
Avoiding Routine Expenses
These include annual check-ups at the doctor, small home repairs and regular maintenance on your car. If you avoid smaller expenses like these in your attempt to live frugally, you’ll be letting these issues fester until they become much bigger ones—a chronic illness or a major fix to your house or car.
Spending on Deal Sites
Step away from Groupon…and let’s add any other deal site to the list. It’s easy to click and buy that seemingly great deal at the local restaurant or mini golf course for the kids. But if you have no plans to go to either, you’ve just shelled out your hard-earned dollars on something you never planned to spend money on in the first place. You haven’t saved any money.
Spending More in Gas to Save
If you’re driving all over—from grocery store to drug store to big box warehouse—for the very best deals each week, you may be spending a bit less on individual items, but you’re also spending your valuable time and gas money to get those “deals.”
There’s probably a better way to spend your time. Could you, for instance, work a couple more hours to boost your pay? Could you use that time to complete an online course to improve your job skills to earn a raise? Could you clear out items in your house to sell? Could you spend some extra time on a hobby that might make you a little money on the side?
Cutting back is required when your aim is to pay off debt or save more money toward retirement. Just don’t get so caught up in living frugally that your focus is only on each penny and not your long-term goals.
If you are experiencing financial difficulty and are looking for a solution, non-profit credit counseling can help you make sense of all your options. Contact us today for a free financial assessment with one of our certified credit counselors.
Consumer Education Services, Inc. (CESI) is a non-profit service provider of comprehensive personal financial education and solutions for all life stages and for all of life’s milestones. Our goal is enhanced economic security for everyone we serve.
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