You scrimp, save and bargain shop all in hopes of sticking to your monthly budget. While these are all practices designed to help you live a financially stable life, some of your well-intentioned habits may be causing more harm than good. Check out these seven financial habits that could actually be putting a dent in your wallet.
1. Your budget is too tight
You know when you follow a super-strict diet and eventually end up indulging in the foods you’ve been craving for months? Something similar happens when you follow an unrealistic budget. Following a budget is great. But following one that prevents you from spending money on an occasional indulgence isn’t healthy.
According to Affordable School Online, you’ll be more successful implementing small budget changes over time, while working toward a larger goal, such as cutting down on monthly expenses. Strict budgets limit your opportunities, meaning the chances you may have to experience something great or purchase something you need or want at a deep discount. You don’t want to get to the point where your budget feels like it’s causing you to miss out on once-in-a-lifetime purchases and opportunities, per Affordable School Online. Use your budget to prevent yourself from going on shopping sprees and impulse shopping – don’t let it control your life.
2. You buy items just because they’re on sale
“So often, we find a deal that is too good to pass up, yet we wouldn’t have even bought the item or service if it had not been mentioned to us,” Ozeme J. Bonnette, author of Get What Belongs to You: A Christian Guide to Managing Your Finances, explains to Daily Worth.
A sale, which is typically thought of as a budget-friendly word, can actually be extremely dangerous. The worst can be clothing sales, which lure buyers to pick up stuff they don’t need just because items are labeled as half off. To fight tempting sales, unsubscribe from store newsletters and catalogs. In addition, don’t approach sales as being good for your wallet unless something you need has been marked down.
3. You buy more to get a discount
How many times has a retailer talked you into picking up one or two more items in order to take advantage of a discount? A great example of this is free shipping. How often have you been shopping online and added a few more items in order to qualify for free shipping?
Free shipping is great if you actually need the stuff you’re buying. It’s not nearly as good if you’re buying items you don’t need just to take advantage of the “deal.” Yes, paying for shipping is annoying. But spending more than necessary just so you don’t have to pay for it isn’t a good financial move.
4. You buy a coupon to save money later
A perfect example of this is Groupon or LivingSocial, which send daily emails detailing the best deals in your area. The problem is many people often pick up coupons for things they’ve never even thought about doing. MSN writes that people purchase these coupons, forget about them, and then they expire, resulting in a huge waste of money. Make sure you’re only using these services for items you know you’ll use, such as one that’s for your favorite restaurant. There’s a much better chance you won’t forget about it if it’s something you actually like.
5. You commit to a long-term gym contract
Don’t make a two-year commitment to a gym as a way to force yourself to exercise. Many people sign a long-term gym contract, only to stick with it for a few months and then spend the next year and a half paying for a membership they don’t use.
“Signing a long-term commitment for a gym membership can be a bad move,” Clare Levison, author of Frugal Isn’t Cheap, explains to The Street. “You might save $5 or $10 a month by signing up for a year. Then you don’t use it — so it really wasn’t a better deal. It might be a better idea to pay more monthly until you’re sure you’re going use it. At the end of three months if you decide you’re going to quit going to the gym, you can just stop. You haven’t committed yourself to a year’s worth of payments.”
6. You over save
Yes, there is such a thing. You save because it gives you financial freedom and lets you do the things you want. However, if you take it too far, you may be missing out on many things. Consumerism Commentary writes that the point of saving is to eventually do something with that money. Saving is the “desire to do something now for the chance of doing something more later. Those nurturing a superfrugal mindset argue you should always choose the latter. The problem with the future is it never arrives regardless of how long you wait. Even though there is always a place or time or dollar amount where you can draw the line and begin living your life, that line may never come.”
Should you save? Yes. But it’s a balancing act. Set aside money, but let yourself enjoy those savings occasionally. And make sure as you’re saving, you’re working toward rewards, such as a vacation or even a down payment on a home.
7. You buy the cheapest of everything
If you always gravitate toward the cheapest item, there’s a good chance you’ll end up spending more over time, Kyle James, owner and founder of Rather-Be-Shopping.com, explains to Daily Worth. Instead, look at spending a little bit more on some items as an investment. For example, it may be tempting to skimp on pricey tools, but cheaper versions often have to be replaced right away.
Do your research before buying an expensive item. Take the time to ensure it’s a quality product, and then tell yourself it’s worth the extra money because you won’t be replacing it in the near future. How do you know when to cut back and when to splurge? For office supplies, a visit to the dollar store is fine. But when it comes to a nice TV or laptop, it’ll pay to invest in quality, per Daily Worth. It doesn’t need to be the most expensive product on the market, it just shouldn’t be the cheapest either.