5 Reasons to Stop Being So Cheap
Everyone is looking for ways to save money, but sometimes, those methods can do more harm than good. If penny pinching takes over your entire worldview, the consequences can be dire. GoBankingRates talked to financial experts about why being overly frugal is damaging, and how to create a more effective pattern of spending.
You’ll Just End Up Spending More Down the Road
When shopping, it can be really tempting to opt for the cheaper choice. But in a lot of cases, that just means you’re signing yourself up to buy the item again in the not-so-distant future. Compromising quality for price can end up costing just as much, if not more, than the expensive alternative.
“When you invest in low-quality over high-quality items, you’re skimping on value,” Nishank Khanna, the Chief Financial Officer of Clarify Capital explained. “A good example of this would be purchasing an old car (>10 years) versus buying a lightly used (2-4 years) car. The old car is going to be much more likely to end up breaking down and costing you more over time.”
You Compromise Your Health
It’s an unfortunate reality that fast food simply costs less than healthy entrees from a restaurant. However, this doesn’t mean you have to throw healthy life choices out the window. Cooking at home can be a much healthier and cost-effective choice.
Personal finance expert and Founder of LogicalDollar Anna Barker said “Meal planning can help, as it lets you base your meals around the same few ingredients rather than feeling like you have to buy new food items for every meal.” Eating healthier also has a positive impact on your health, potentially saving money on medical bills in the long run.
You Alienate People Close to You
Sometimes what one person thinks of as “frugal,” some others might call “selfish.” This might apply to when everyone in your friend group is picking up a round of drinks except you, or you’re always conveniently “forgetting” your wallet when you’re out to lunch with family.
Barker advised to prioritize your relationships by suggesting get-togethers that feel financially comfortable to you. “Why not host a potluck dinner at home rather than going out for dinner? You’ll save a ton of money and still get to have a social life,” Barker said. Additionally, honesty is the best policy: if you can’t afford to go to the bar, explain to friends that you’re trying to save money for the time being, but offer to have them over for a night in.
You Miss Out on Some Incredible Life Experiences
Obviously, part of saving money means turning down fun outings every once in a while, but when you’re turning down everything fun, you start to diminish your quality of life. You could be depriving yourself of enriching experiences you regret skipping later. On a more basic level, you might think you should decline every invite that comes your way because it costs money, even if you can afford it and it might greatly boost your well-being.
Barker explained that this method is not good for your mental health, nor is it sustainable. “Instead, aim to leave a little bit of room in your budget for something you like doing, even if it’s just getting a coffee with a friend once a month. That way, you’re giving yourself the best chance to be able to follow your financial plan over the long-term.”
Budgeting 101: How To Create a Budget You Can Live With
You Could Be Making Better Financial Decisions
Though savings plays a big part in growing your financial assets, so does diversifying your revenue streams. Suzanne Howell, founder of The Remote Mom, says the best way to improve your finances to find multiple ways of earning income. “Being frugal and finding ways to save money is a great strategy to help you manage your budget and live below your means,” Howell said.
“However, in the long term, it will not help you achieve the financial freedom you are looking for. Instead of just relying on your 9-5 job, you should be finding more ways to bring in money every month. Some ways to do this are to start investing in stocks or real estate properties, find part-time jobs or side hustles such as Instacart or bartending, or by starting an online business.”
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