3 Ways Being Cheap Can Prove To Be Costly

Thinking about your spending decisions is important, but don’t overdo it.

To improve your personal finances, you have to become frugal. This is especially true if you’re trying to pay off debt; you may want to slash your budget to the bone, so that you can repay your debts as soon as possible.

Sadly, frugality is often confused with another type of financial behavior: being cheap. It’s tempting to think that living as cheaply as possible is a great decision. After all, by being cheap you’ll pay your debts off quickly and be able to amass decent savings— so how could being cheap ever be a problem if it produces those results? Read on to find out…

Why Replacements Are So Important

Sometimes, you can buy an item for an incredibly low price and it’ll last for years. However, there are types of products where buying cheap items just isn’t worth it, because the item will deteriorate quickly and you’ll have to replace it. It never pays to skimp on:

• Footwear
• Electronic equipment
• Cooking equipment

I still use a pair of hiking boots that I bought for college 30+ years ago. They were expensive, but they’re still wearable. Spending less on these areas just means you will have to replace items more often, which will ultimately prove to be more expensive than just buying quality products to begin with.

Long-Term Decisions

When your only concern is spending as little money as possible, you’re not going to make intelligent decisions for the long term. If your decision is only based on saving the most money now, you may be worse off over time.

Let’s say you’re out on the town and enjoying yourself. You’ve probably had a bit too much to drink; you’re not drunk, but you’re not feeling 100% sober either. You could take a taxi home, but that’d be expensive, so you decide to drive home. The consequences of this decision could be absolutely dire; you could get in an accident, be prosecuted, and even a find yourself defending a case against firms such as Aitken – Aitken – Cohn; firms that have vast experience in winning cases against people in your situation. Ultimately, that one cheap decision could cost you your driving license, or your job.

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This, of course, is an extreme example, but it explains why being cheap may have dire consequences. When money is the only factor in your decision-making process, your decision-making process is inherently flawed.

Is Rewarding Yourself OK?

When it comes to managing your finances and your personal budget, it’s easy to assume the only thing you have to worry about is numbers on the page. However, you need to balance your desire to reduce costs with your emotional well being.

It’s ok to reward yourself every once in a while.

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If you choose a continuous path of “as cheap as possible”, it won’t be long until you begin to feel denied, left out, and restricted. Good financial management should never impact your emotionally; there should always be some room for flexibility, and the occasional financial indulgence every now and again. Treat yourself occasionally, rather than insisting on being as cheap as possible; it will do wonders for your overall mood, willpower, and determination to manage your finances in future.

When you reach a goal or have an accomplishment, reward yourself.

Are You Balanced?

Having a frugal, thrifty attitude to your finances is good, but being cheap is bad. Try to balance your need to save with the desire to indulge. Balancing these desires is crucial to successful personal financial management, so keep these points in mind, and make sure you stay in balance.

This is for educational purposes only.

Ken Boyd

Author: Cost Accounting for Dummies, Accounting All-In-One for Dummies, The CPA Exam for Dummies and 1,001 Accounting Questions for Dummies

Co-Founder: accountinged.com

(email) ken@stltest.net

(website and blog) https://www.accountingaccidentally.com/

(you tube channel) kenboydstl

 

Image: Bullseye, Jeff Turner CC by 2.0