6 Money Traps Hidden in Your Frugal Habits

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Many of us resolve to be more frugal in the new year, setting up goals to live more modestly. But no matter how good our intentions are, there are some money traps that can blind us to achieving what we want, according to experts.

While frugal habits may prove effective in building wealth and financial security over time, there are often numerous unforeseen pitfalls lurking around the corner, according to Loretta Kilday, attorney and spokesperson for Debt Consolidation Care. Here are six of these money traps to watch out for.

Always Buying In Bulk

“One frugal habit I often see ultimately costing people money is buying everything in bulk,” said David Kemmerer, CEO of CoinLedger. “This is one of the primary frugal habits that gets preached, but in my experience it’s really more of a balance between buying things in bulk you know you’ll use, and buying other items as you need them.”

He said buying as you need can be just as frugal, especially if you’re using coupons and shopping wisely. “Even with non-perishable goods, sometimes buying in bulk doesn’t do anything but cost money and take up space in your kitchen and home.”

Comparison Shopping

“I’ve seen lots of frugal living advocates recommending shopping around town at different grocery stores for the best deals on things like meat, produce, etc,” said Carter Seuthe, CEO of Credit Summit Debt Consolidation. “I think this can be a positive frugal habit, but there is a point where it stops saving you money and starts costing you more in gas. Especially with gas prices where they are, sometimes it’s worth skipping certain ingredients for the week or just biting the bullet on spending a bit more to buy more efficiently.”

Jake Hill, finance expert and CEO of DebtHammer Consolidation, agrees. “Although comparison shopping is a hallmark of frugality, driving out of your way to get the best deal at certain stores may be a hidden money trap,” he said.

Hill stressed that if you’re overspending on gas just to save on certain items, you aren’t really benefiting from the deals you’re trying to score. Instead, he recommends focusing on finding the best prices on your everyday essentials from stores that are closer to home.

Keeping Your Old Car

One of the biggest money traps that frugal people can fall into, according to Ann Martin, director of operations at CreditDonkey, is hanging on to an old car too long.

“There’s some logic to driving an old car for as long as you can,” she said. “New cars depreciate very quickly after you drive them off the lot, so there’s a lot of money to be saved by buying a used car and driving it for a long time.”

At some point, though, your old car is going to be more trouble than it’s worth. “Poor gas mileage and frequent repair bills can quickly eat up all of the money you saved by buying used,” Martin explained.

She said a simple way to figure out your break-even point on an old car is to use a car loan calculator to figure out what your payments on a replacement would be. “If you’re spending more to maintain your old car than you would to pay for the loan on a newer one, it’s time to trade up.”

Buying Cheap

One common money trap in frugal habits is the false economy of buying cheap, said Dennis Shirshikov, head of growth at Awning. “Often, in an attempt to save money, people opt for the cheapest options, be it in appliances, clothing, or even services.”

But he said this approach can backfire. “For instance, a cheap appliance may consume more energy and have a shorter lifespan, leading to higher costs in the long run,” he explained. “There’s a saying I often share with my students at the City University of New York: ‘Buy cheap, buy twice.’ This adage encapsulates the hidden costs that aren’t apparent at the point of purchase.”

Janita Grift, frugal living expert and owner of Frugal Fun Finance, noted that being cheap can cost you more money in the long run. “Being frugal is the ideal way to save money, but it can be a trap when you take it too far. When you pay for a cheap mechanic job for $200 that only lasts one year instead of going to a quality mechanic that does a job that lasts three years and costs $300, you end up wasting $300 in the long run.”

Not only that, experts say being cheap also wastes your time. Grift argued, “When you have to go to the store multiple times to replace a cheaper item instead of investing in a quality item you only have to buy once, you spend precious time. Time is money — you can spend this valuable asset working on a side hustle or building a business.”

Coupon Obsessing

Another subtle money trap, according to Shirshikov, is the overemphasis on couponing and discount hunting. While these activities can certainly save money, he said they can also lead to unnecessary spending. 

“I recall a study we discussed in a finance class, which revealed that consumers often end up buying items they don’t need simply because they have a coupon or there’s a sale,” he explained. “It’s essential to differentiate between saving money and spending less. The former is about reducing expenses, whereas the latter can sometimes mean spending money on things we don’t need, just at a lower price.”

Falling for ‘Cheap’ Subscriptions

According to our experts, subscription creep is a prevalent pitfall that takes the form of attractive subscription services. “Though they appear affordable at first, these subscriptions grow their costs bit by bit to cause money to dwindle away behind your back,” said Kilday.

She recommended regularly reviewing and removing any redundant subscriptions as an indispensable way to keep up with frugal habits. Doing so can save you hundreds each year, and ultimately help you stay on track with your financial goals.

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