25 Money-Saving Strategies That Are Actually Hurting You

Author: Dr Penny Pincher / Source: Wise Bread

Taking action to save money can be a great way to get your finances on track. But some of the ways we try to cut costs are actually harmful to our financial well-being. Here are all the money-saving strategies that can backfire on us.

1. Skipping college

College is expensive, so you may think the best plan of action is to skip it and save the money.

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That’s the smarter move, right? Maybe not. Depending on your chosen career field, a degree can mean the difference of more than $1 million in income over the lifetime of your career. So while college is expensive, you’ll also probably earn a lot more with a college degree, even considering the salary you miss out on during the years you are in school. (See also: My Kid Got Accepted to an Expensive Private College — Now What?)

2. Not participating in your 401(k) plan

Your paycheck is already hit with taxes, Social Security, FICA, and other expenses before you get your money. Your natural reaction may be to try to keep your paycheck as fat as possible by not contributing to your employer-sponsored retirement plan. In the long run, this move is almost guaranteed to backfire. Not only are you hurting your own financial future, but 401(k) contributions are tax-advantaged, and if you keep the money in your paycheck, you are more likely to spend it. (See also: 5 Dumb 401(k) Mistakes Smart People Make)

3. Buying food in bulk

Food waste is a big problem, and this can be exacerbated when you buy food in bulk. It can seem smart to load up with bulk food at low cost-per-pound prices, but how many pounds of oats are you really going to eat before they go stale?

4. Not investing in yourself

Reducing expenses is important to stay within your budget and move forward in your financial goals. But obsessing over saving money can result in missing out on opportunities to better your life or invest in yourself. For example, you might skip out on spending $400 for a new suit or $1,000 for career training that would help you land job that pays $20,000 more per year.

5. Deferring expenses

Sometimes getting by cheaply now results in big expenses down the road. For example, you could buy a cheap house with lots of serious issues and benefit now from lower payments, but you may end up pouring money into it later to keep it livable or to get the house in a condition so you can sell it. (See also: 23 Hidden Costs of Buying an Old House)

6. Buying minimal car insurance

You can save money on insurance payments every month by purchasing minimal car insurance. But if you have an accident that results in major damage or injury, minimal insurance could leave you with big bills and cost you more in the long run.

7. Saving to spend

It feels good to save up some money and watch your savings account grow. But if you are saving up a big pot of money with the sole intention of spending it, having funds in a savings account can actually result in spending more money, not less. Examples of this include saving up for expensive items that don’t retain value such as a recreational vehicle or new car.

8. Doing-it-yourself

You can save a lot of money doing projects yourself instead of hiring a professional, but DIY projects still cost a lot of money for materials, not to mention time and effort. And if you do something wrong, you may need to hire a professional anyway to fix your mistake. Before you take on a project, make sure it is worth doing. (See also: How to Keep DIY Projects From Ruining Your Life)

9. Buying items on sale that you don’t need

Buying things on sale can be a good way to save money, but this only works if you need the items in the first place and will actually use them within a reasonable period of time. If you buy stuff you don’t need just because it’s on sale — no matter how cheap it is — you are wasting money.

10. Skipping meals

Skipping meals occasionally can save you money on food. However, this savings can be offset by reduced productivity and by the potential for making poor spending and financial decisions while hungry.