Reducing financial waste is a top goal for many people, especially as the cost of living escalates.
According to a PwC report, consumers drastically adjusted their spending behaviors in 2023, with 53% saying they were holding back on nonessential spending and 15% indicating that they stopped nonessential spending completely. Additionally, a 2023 Experian study found that 66% said they’re actively looking for ways to trim expenses from their monthly budget.
Clearly there’s a desire to pare down, but can the process of saving money also cost consumers money? In some circumstances, yes. Read on to find out how.
1. Buying or Keeping a Clunker
It can be tempting to purchase the cheapest old possible or keep the one you have that is falling apart. It’s often not a financially prudent idea, though, Jason Cherubini, an executive-in-residence at Loyola University Maryland’s Department of Finance, said in an email.
“Many of us, myself included, like the idea of not having a car note and would rather keep the older car going,” Cherubini says.
“But a new car is reliable and will generally not have the unexpected repairs and maintenance costs of an older car. So, the decision is not just a car note versus no car note, it is a car note that provides reliability and a known payment versus no car note but unreliable transportation and unexpected bills,” he adds.
Therefore, if you need your vehicle to get around and don’t have the means to pay for expensive repairs, you may be better off investing in a reliable new car with a fixed monthly payment instead of an older model that you pay for with cash.
2. Overbuying in Bulk
Purchasing items you need and will use in bulk can be financially beneficial, but be careful to check the cost per weight. For example, at Costco you might buy a 24-pack of chicken breasts for $139.99, which is $12.73 per pound, but a six-pack of similar chicken breasts at Safeway costs $23.96, which is $5.99 per pound.
Even when the per-unit price is lower when you buy in bulk, buying in large increments can stress your budget. That might cause you to charge the expensive items to your credit cards, which can lead to revolving debt and finance fees.
The potential for waste is also a factor.
“Snagging a case of mac and cheese or a gallon of ketchup at a bargain price might seem like hitting the jackpot, but let’s be real,” says Jeff Rose, certified financial planner and CEO and founder of Alliance Wealth Management LLC in Carbondale, Illinois.
“Unless you’re planning to turn your living room into a makeshift diner, that’s a lot of ketchup and mac to get through. Buying in massive quantities might just be a shortcut to wasting money and a lot of food,” he says.
3. Skimping on Insurance Coverage
“Too often I find clients opting for the cheapest insurance policy or the lowest deductible offered,” says Brian K. Seymour, II, CEO and founder at Prosperitage Wealth in McDonough, Georgia.
Both of these are usually mistakes, he says. Inadequate coverage can leave you financially vulnerable in case of accidents, health issues or property damage. Cars, building materials and healthcare costs are all getting much more expensive and that increase is felt in rising insurance rates.
“Maintaining only the state-mandated coverage can leave you personally responsible for any damages that exceed your policy limits,” Seymour says.
He also recommends paying a bit more for comprehensive car insurance, since it can save you from substantial out-of-pocket expenses later. Umbrella policies tend to be inexpensive but can provide you with extra coverage for instances that exceed your limits, giving you further protection.
Analyze the deductible, too, says Seymour.
“I recently reviewed the policy of a client that was a great saver and even better driver yet maintained the lowest deductible possible,” he says.
“When we reviewed the option of increasing the deductible from $250 to $1,000, the monthly premium decreased by over $100 a month. In a single year, we not only saved enough to cover the higher deductible, but all the future savings were put to work towards their other goals,” he adds.
4. Selling Items for Less Than the Effort Is Worth
Putting the work into selling things you don’t want or need can be a great way to add more income to your life. The problem is, it can be more trouble than it’s worth and can even cost you money, says Christopher Naghibi, Esq., CEO at First Foundation Bank headquartered in Irvine, California.
The process of making and fulfilling online sales can use up many hours.
“You need to take photos, list them and then ultimately sell and ship them,” says Naghibi says. “A lot of people spend an inordinate amount of time doing this to earn some extra money, but what you are actually doing is wasting a tremendous amount of time.”
For low-value items like used clothes, you can come out ahead by donating them to a non-profit organization and potentially getting the charitable tax deduction if you itemize.
“Use your time to do more important things,” advises Naghibi says. “You already spent the money to buy the things and you aren’t going to recoup your losses on most items.”
The exceptions, he notes, are things like luxury goods and newer electronics, since the profit (which counts as taxable income) can be high.
5. DYIing Home Repairs
One of the downsides of owning your own home is that you’re responsible for the repairs and upgrades. Eventually you may need to pay for one or more major projects, from replacing a roof to fixing plumbing issues.
Because hiring a professional can be very expensive, you may attempt to do the work yourself. That can open the door to even higher costs, though, says Josh Rudin, owner of ASAP Restoration LLC in Tempe, Arizona.
“We see homeowners all the time who did construction work themselves and it exposed mold, lead, or asbestos,” Rudin says.
“We’ve had customers call us after having a leak or flood in the past and then all of a sudden they notice mold crawling up all their walls a week or so later. What could have been a relatively affordable job or a simple insurance claim turns into an extremely expensive fix that has to come out of pocket because the property owner didn’t follow the proper protocols as directed by the insurance provider and now the claim is denied for negligence,” he adds.
Unless you really know what you’re doing and have the proper tools, hire the best contractor or repair person you can afford.
“Get two to three estimates and make sure they are licensed and bonded to do the work,” Rudin says. “Check the Better Business Bureau for complaints. When comparing, make sure it’s apples-to-apples with the same materials and warranties. Cheap is not always good. Nonqualified is never good.”
Another tip: Invest in regular home maintenance, since it can prevent big problems from starting.
6. Avoiding the Dentist
If you don’t have dental insurance — or do, but the coverage is minimal — you may be tempted to postpone regular trips to the dentist. You don’t really need to get so many cleanings and that dull ache in your back molar can wait a little longer, right? Wrong, says Michael Kosdon, DDS and owner of Smiles of NYC in New York City.
“A minimum of two times a year for a checkup is important,” Kosdon says. “”This way something minor doesn’t get out of hand. We can fix a simple cavity when it’s small and inexpensive. If you wait, it’s not a simple filling anymore.”
The longer you put the procedure off, the more extensive and costly it will be. Instead of a filling costing a few hundred dollars, you may need a crown.
According to Byte data, crowns average between $500 to $2,500. Delay more and you may lose the tooth and need a dental implant.
“That can cost $5,000 to $6,000,” Kosdon says. “That’s why prevention is key. A checkup and cleaning is not expensive, so it’s not worth it to wait until you’re in a better financial position.”
7. Cheaping Out
Think back on the items you’ve bought and ask yourself if they were worth the price. Odds are there are times when spending more on quality was the better decision. A $20 fast fashion dress may have lasted for a single occasion, while one that cost you $100 may still be looking and feeling great after a year of use.
Make sure you review your services, too. For example, you may have chosen a bare-bones health club because the membership fee was super low, but are unmotivated to go because it doesn’t have everything you want.
“Pick a gym that is affordable but is upscale enough for you to want to go regularly,” Naghibi says. “If you don’t enjoy the lower priced place, you probably won’t end up going and then the monthly fee will be wasted.”
Save Money on Saving Money
Pursuing the best deal and buying what you want and need at the right time is important. The last thing you want, especially when cash is tight and inflation is escalating, is for the process to cost you more in the end. Hone your consumer spending skills so you always come out ahead.
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