I have a confession: I am not a natural-born money genius and I didn’t start off working as a personal finance journalist. I used to work part-time gigs – retail, service industry, even a telemarketing call center.
When I worked those jobs, I managed to spend almost everything I made. Then one day I realized I had to shape up, learn more about personal finance, and stop buying bobbleheads of cult classic film characters (OK, sometimes I still do that).
I’d like to think I’ve learned a lot, but I learned a lot of it the hard way – through financial mishap. My biggest mistakes were actually money moves I thought were brilliant at the time.
Here are five things I used to think saved money, and why they were actually costing me money.
1. Driving to cheaper gas
It started off innocently enough. My tank would run low and I’d start looking for gas signs. I’d see one for, say, $2.39 per gallon and then another for $2.38 right across the street. Wait a minute! I bet I could keep driving and find even better deals. So I’d drive another mile, then another, then I’d see a sign for $2.37 but convince myself I could find a lower price. Twenty minutes later and I’d wasted a gallon of gas trying to save 4 cents a gallon. That makes no sense.
You should comparison shop for gas but not while driving around. Instead, use a website or app like GasBuddy.com to find a cheap (and nearby) station before you head out.
2. Biting off more than you can chew
I have a love/hate relationship with my Sam’s Club membership. The prices are great but there are only two of us and one puppy in my house. I learned the hard way that buying food from Sam’s Club isn’t always a good idea. For example, I bought a 10-pound bag of oranges for $6.98, or roughly 70 cents a pound. It was a great deal, but we couldn’t eat them all and about 4 pounds went bad. In the end I wasted about $3 trying to get a great deal on bulk food.
Bulk food is a great idea if you have a large family or you can freeze and eat the food later. If not, I’d skip buying bulk fresh produce, dairy and other foods that don’t keep. If you waste the food, you waste the money.
3. Over-investing in a new hobby
I have a bad habit of going full speed ahead with an idea before I actually commit to it. Take photography, for example. In college I saw a photojournalism exhibit and decided I was going to be the next Robert Capa. I ran out and bought a $399 Nikon camera and about $200 worth of lenses and other accessories. Six months later I realized photojournalism probably wasn’t in my future, and the pricey camera found its way to a shelf in my closet.
I sold the camera and made most of my money back, but I learned a valuable lesson. When I picked up knitting a few years later I resisted the urge to buy $20 handspun organic yarns and stuck with $3 skeins until I knew it was a hobby I wanted to stick with.
Hobbies are a great way to spend your free time. Just make sure you’re committed before you start buying high-end equipment. When you do, look for deals at garage sales, thrift stores and overstock sites online.
4. Reaching for more technology than you need
With so much technology out there, you can easily think you need more features, software or hardware than you actually do. I once bought a $2,000 laptop that was a designer’s, gamer’s, and Web developer’s dream — and I used it to run Word and look at YouTube videos. And then the hard drive crashed two days after the two-year warranty expired, so not only did I not use the computer for what it was made for, I paid $1,000 a year for it.
A computer can do a lot, but make sure you buy one that doesn’t do everything unless that’s specifically what you need. Are you just using it to check your email and browse the Internet for a few hours a day? If so, then you don’t need a fully stocked computer. For instance, if you aren’t a graphic designer, you don’t need the latest edition of Photoshop, which goes for $654 at Newegg.com.
5. Falling prey to sales
In college I hit the mall nearly every week. I didn’t need new clothes, but I was getting a great deal because they were on sale. Do you see the failed logic there? I didn’t need to spend any money, but I went out and spent it anyway because I was getting a deal. That isn’t a deal.
To truly get a deal, wait until you need something and then buy it when it’s on sale. Don’t hunt for sales when you don’t need something; you’re just giving yourself an excuse to spend money.
Have you made any dumb money moves? Sound off on our Facebook page and tell us about them.