Being cheap or frugal is a skill that is hard to learn. Once you learn it, you can do amazing things with a budget. You can stash away money and build much more wealth than you ever thought possible.
Being cheap does not come without problems however. It can be hard to shut off which can often lead to missed life opportunities and, if you do not think about the long term, can lead to the loss of money. Don’t believe me? Take a look at some common ways that being cheap can cost you money.
1. Insurance
There are a lot of ways that being cheap on insurance can cause some problems. Just as many ways as there are different types of insurance.
From an automotive aspect, if you have only liability insurance, you could be putting yourself at significant risk. In the event of having your vehicle damaged or totaled when at fault or with the involvement of an uninsured motorist, you could face some pretty steep bills.
Of course, insurance companies would not offer insurance if they could not make a profit on it. This means, the odds are likely that you will come out ahead by only carrying the minimum that you are required, which may be only liability insurance. Still, not having full coverage is rolling the dice. Why risk a 20,000 dollar vehicle to save 800 dollars a year.
Even if you do decide to get full coverage on your vehicle or the proper home insurance coverage, being cheap and going with the lowest rte can also come back to bite you. Cheap insurance companies are often cheap for a reason, often skimping on the amount of money that they pay out. This means that in the event of some kind of loss to your home, auto or other property, you might find it difficult to collect what you are fully owed.
When it comes time to look into insurance, be sure to look at more than just the price tag. Think about what would happen if you needed to put it into actual use and use that as one of your deciding factors when you decide home much to spend.
2. Tools
Cheap tools are just that, cheap. What do cheap things do, they break. This means that if you continually buy cheap hand tools and power tools, you will continually be replacing them.
Now, yes it is true that tools can be very expensive. This is why so many professionals end up financing their tools when they first get started. But, the reason that professional mechanics buy the best is because they know that they will last forever. Buy it once and that is it. Cheaper in the long run.
For the home mechanic, it is not so clear however. You probably will not use your tools as much and the temptation is there to buy a cheap set of hand tools or that generic brand drill. This is almost always a bad decision because while a cheap tool might give you a year of service, that expensive one might give you 20 years or even last a lifetime.
So, next time you go to buy that new tool, give some thought to quality and long term value.
3. Clothing
With some things, you just pay for quality and clothing is one of those things.
Have you ever bought a shirt only to have it unravel or lose all of it’s color in the first wash? We all have and it was because the quality was not there and you have to pay for quality.
This is not to say that you need to buy the most expensive, designer quality clothing in order to get a wardrobe that will last. That would be just plain wasteful and not what a frugal person would do.
What you should do, however, is not buy the cheapest of the cheap. Good clothing, fairly priced from a reputable store. If you can’t bring yourself to open the wallet that far, you can still have quality on a budget however. What you need to do is shop clearance, end of season sales. Always be buying for the next years season and you can save a fortune without sacrificing quality.
4. Appliances
Just like with clothing, there is a middle ground that you should shoot for when purchasing appliances. You do not want to buy the top of the line with a bunch of features that you do not need. But, you also do not want to buy the cheapest available because it will be made of the cheapest parts.
When shopping for appliances, consider your budget, but also consider the reputation of the manufacturer and the reviews on the appliances you are considering.
Another thing to consider is that when you are buying an appliance, you are not looking at just it’s purchase price. You must also consider it’s cost of operation. A good energy star rated water heater, for example, can easily save you 400 dollars a year in energy costs. The same can be said with high quality dishwashers, dryers, washing machines, etc.
5. Diapers
I always throw this one out there because I see so many people buying those store brand diapers. They throw them in their cart and think that they are just making a wise decision and saving fortune. The reality is quite the opposite.
On the surface, cheap diapers make sense. After all, they are just going to get pooped on right? This is true, which is why you should not go cheap. Cheap diapers all have one thing in common, they leak. When they do, you have got quite a mess on your hand. You will have a lot of cleaning to do and will probably ruin an outfit in the process.
DO yourself a favor and buy only name brand diapers if you have a baby. You will come out way ahead of the game in the long run both in sanity and saved money.
Wrapping Up
Frugality or cheapness is a great asset to have when you are trying to save as much money as possible. It can get addictive though and often people find themselves being cheap to the extreme. Not only can being cheap cost you money in the long run sometimes, it can also cost you much more. Don’t forget to enjoy yourself sometimes. Money is not wasted if it keeps you sane and gives you a happier life, you just need to find the right line to walk. Balancing your frugality is the key.
