4 Times Saving Money Can Actually Cost You

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When funds are limited, spending decisions are the result of a simple dollar-to-dollar comparison – what will result in a lower overall cost right now? If two items are on priced exactly the same, then this works in the consumer’s favor.

But sometimes being a smart consumer means spending more money today to receive more value in the long run, or paying larger upfront costs in order to avoid a catastrophe later down the road.

Personal anxiety over seeing the funds in my accounts dwindle has resulted in purchasing decisions that didn’t actually make sense logically – and I’ve always come to see where this concept of “saving” steered me in the wrong direction.

Are you guilty of spending less when it wasn’t in your best interest? Here are a few times to avoid falling into this trap:

Spending less in exchange for smaller portions 

For many, buying in bulk doesn’t always make the most sense. Produce from big box stores like Costco, for instance, can quickly go bad before the average-sized family can consume it. However, if the space in your home allows, certain items are worth swallowing a larger upfront cost in exchange for more of the product at a lower price. Toilet paper, paper towels, toothpaste – each of these are worth paying more now to purchase in bulk.

I recently had this dilemma when I was faced with purchasing a supplement I routinely use. Instead of going with the larger container and paying less over time, I opted for the smaller container and was back at the store less than a week later to purchase more. What I saved in initial upfront costs was quickly lost in time and gas.

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Avoiding routine maintenance because of upfront costs

According to Bankrate, “…poorly maintained vehicles cause thousands of wrecks each year. The bill for accidents resulting in unperformed vehicle maintenance tops $2 billion a year, according to a 2004 study by Car Care Council, an advocacy group in Bethesda, Md.”

If the cost to routinely maintain your car is one you’re willing to forgo in exchange for more cash in your pocket now, you may want to think twice about the seriousness of that decision. A whopping 84% of vehicles inspected during the Car Care Council’s Car Care Months last year were in need of service or parts – everything from improperly placed batteries to unsatisfactory belts.

Even if the decision to put off routine maintenance doesn’t result in a life-threatening situation, it can certainly cause damage that is far more expensive to fix later on.

Selecting items that quickly fell apart

Spending more on clothing as an overarching principal doesn’t always make sense. I refuse to spend a bundle on white t-shirts for instance, because stains are inevitable (at least for me).

However, for those certain clothing pieces you know will become a wardrobe staple and can easily stand the test of changing styles, spending more is often far more economical than forking over cash for something you’ll need to replace in six months.

In addition, poor shoes will not only fall apart quickly, but they could add to your pain and discomfort over time. According to the University of Maryland Medical Center, 75% of people will experience foot pain in their life, and one of the three leading causes is ill-fitting shoes. If you know a pair of shoes will be worn frequently, spend the extra money to ensure they are equipped to support your feet and endure some wear and tear.

Paying in installments instead of all at once

Have you ever gotten sucked into a late-night infomercial that promises some amazing product for only five payments of $19.99? That’s called fragmented pricing, and it’s an easy way for sellers to convince you you’re getting a killer deal – by highlighting a low installment price and not the total price.

The majority of the time, installment pricing only helps one person – the seller. On the flip side, if you pay the total price upfront, you often save a significant amount over the long run.

This is the entire premise behind the business model at rent-to-own shops – you agree to pay a low monthly bill in exchange for say a TV or new couch. With interest rates as high as 100%, over the length of the contract, you will pay far more than the item is even worth.

It’ll pack a bigger punch to your wallet initially, but there are savings to be had over time.

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