When you start making a serious effort to save money, you have to guard against money saving measures getting out of control and costing you more than youโre saving. Even after you get your finances under control, this problem can rear its ugly head. I still sometimes struggle with finding a new way to save, and then going completely overboard until Iโm spending more than Iโm saving. Itโs sneaky, and itโs easy to justify because, โHey, Iโm saving money!โ Until youโre not.ย
What constitutes a money-saving effort gone wrong?
Where do good intentions go off the rails? Here are a few examples (which may or may not be from my own lifeโฆ):ย
Switching to streaming, only to subscribe to every service.
When the cable bill hit the stratosphere, we switched to streaming. The savings were substantial and it was wonderful. Until we subscribed to another service, then another, and another. And, oh yeah, threw in a cable replacement service like YouTube TV. Before we knew it, we were spending just as much, if not more, than we were on cable. Oops.ย
Taking up a โcheapโ hobby/entertainment, only to buy way too much stuff.
A long time ago, I took up board games for a cheap source of entertainment. Then I really got into it as a hobby and that โcheapโ entertainment became a money drain. (And donโt get me started on what Kickstarter can do to your wallet.) While itโs true that each individual game doesnโt cost that much and offers a lot of replayability (making it relatively cheap entertainment), buying a lot of games negates the savings and becomes a huge expense.ย
This can happen with any hobby. You take up something that seems inexpensive, and it is when taken individually, but when you become obsessed with it, it drains you dry. Reading, arts and crafts, photography, writing, model making, wood carvingโฆ Whatever it is, it can spiral out of control.ย
Taking up a craft in order to make things for others instead of buying gifts, only to spend a shedload on supplies.
I once took up crafting as a way to make cards and gifts for others. It seemed like a less costly way to handle gift-giving. And it was, until I decided I needed more/better supplies, and that if one gift was good, giving someone more was better. After a while, I would have been better off buying gifts at Tiffanyโs.ย
Taking up DIY only to blow a ton on tools.
Learning to fix stuff around the house or on your car can be a great way to save money. If you can avoid calling a professional, itโs got to be cheaper, right? Well, yes, but not if you also buy every tool and gadget in the hardware store. I know several people who have spent way more on tools than they ever would have on a repairman. Buying tools isnโt a bad thing. As long as you use them and you donโt have more than you need, great. But if youโre buying tools under cover of โsaving money,โ then youโre in trouble.ย
Cooking at home and buying every appliance and gadget. (Or gourmet ingredients and booze.)
Prefer the kitchen over the garage? The same problem applies. Yes, cooking at home is cheaper than eating out. But if you use โcooking at homeโ as cover for buying every appliance, pan set, cookbook, and knife on the market, youโre not saving money. Buy what you need to make reasonable meals and leave it at that. Buying a top of the line mixer because you might make a cake at Christmas is trouble.ย
And while treating yourself to a deluxe meal at home complete with good wine, etc. is a fun treat, it shouldnโt be your default cook-at-home strategy. Gourmet food and booze isnโt cheap. Yes, itโs probably still cheaper to do it at home than it is to go to a five star restaurant, but doing it every night is spendy, no matter how you slice it. Pare it down before you claim to be โsaving.โ
Blowing more at the thrift store than you ever spent at the department store because itโs โcheaper.โ
Thrift store shopping is perhaps the easiest way for a savings measure to get out of control. Thrift shopping is a great way to save money. But if youโre buying more and more because, โItโs so cheap!โ youโre not saving anymore. And if local thrift shopping slides into hanging out on eBay, Craigslist, Facebook Marketplace, or any other shopping/auction site, youโre headed for the downward spiral. It might be better to have never discovered the secondhand market at all.ย
There are many more I could come up with, but you get the gist. Things you start doing to save money can end up costing you more than if you had just kept going along the old way.ย
So how do you keep your saving measures under control?
Know your numbers. (And be honest.)
How much are you spending, and what are you saving? (Donโt guess, either. Do the math.) Letโs start with the streaming example. What, exactly, were you spending on cable? If it was $200, then you need to keep your streaming bill as far under that $200 as possible in order to be saving money. If youโre paying for three subscriptions at $20 apiece, thatโs $60 and youโre doing pretty well. Oh, youโre spending $250 on subscriptions? Youโve lost the savings game.ย
If youโre trying to save on dining out vs. cooking at home, first calculate the amount you spend at restaurants each month. Then figure out how much youโre spending to make meals at home. To make this honest, you have to calculate the cost of all your groceries for those meals, including booze and special ingredients. And if you buy any equipment to help, you have to add that in and factor how often youโre using it to know if youโre still saving money. (Buying a bread maker and using it to make all of your bread (and you eat a lot of it) may be worth it. Using it to make one loaf of bread is not.)ย
For my board game example, one board game at $50 played 20 times worked out to just $2.50 per play. Spread that out over three or four people and the cost was massively cheaper than a movie, a night at the bowling alley, or a show. However, once the game closet got full of $50 games, and we were only playing them once or twice, the cost went up. At that point, other forms of entertainment would have been cheaper.ย
Sometimes these calculations arenโt easy. The factors you must account for arenโt always obvious, or easy to prorate. And everything is easy to justify. This is why it becomes so easy to say youโre saving money long past the point youโre not. And little things add up. That one roll of yarn isnโt the problem. Itโs the next fifty. So be honest with yourself and do the math. Thatโs the only way to know for sure when a savings measure is actually saving you money.ย
Read More:
- Buying Stuff Isnโt Saving Money
- Are You Buying a Useful Thing, or a Fantasy
Come back to what you love! Dollardig.com is the most reliable cash-back site on the web.ย Justย sign up, click, shop, and get full cashback!
Read the full article here