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The Real Cost of Being a Cheapskate

·5 min read
ShutterstockProfessional / Shutterstock.com
ShutterstockProfessional / Shutterstock.com

Being frugal is admirable. Being cheap is not. When you’re frugal, you make wise and careful decisions with your money without painful sacrifices. When you’re cheap, you’re willing to sacrifice things like quality, taste, enjoyment — and even your health and well-being — just to save a buck.

Unfortunately, being a cheapskate can come at a big cost. Here’s how it can backfire, and what you should do to save money instead.

Day 1 of Living Richer: The Top 3 Budgeting Tips From Experts
Read: What It Means To Live a Truly Rich Life and How To Achieve It

Being Cheap Can Lead to Binge Spending

“Willpower plays a major role in how we manage our money, said Erin Papworth MPH, money coach and founder of financial well-being platform Nav.it. “When we become fatigued from resisting temptation (for what feels like the rest of eternity), it becomes more difficult to make sacrifices and practice extreme frugality in our everyday lives. After long stretches of continuous sacrifice, willpower fatigue can actually lead to binge spending in the form of impulse buying and overspending.

“To avoid these outcomes, it is perhaps better — not to mention, more realistic — to allot a small amount of your budget to ‘fun’ money. You can let off a little steam while gradually improving your spending habits over time.”

Find Out: 17 Biggest Budgeting Mistakes You’re Making

Being Cheap Doesn’t Help Maximize Your Savings

“Being extremely minimal with your spending can actually hurt your savings plan,” said Alina Clark, co-founder of CocoDoc. “Even though living frugally can actually help you save some money, it often ends up costing you more than it saves. It’s an opportunity cost of sorts. You end up focusing on the pennies and dollars saved, rather than actually growing your savings.

Savings are great. But stagnant savings, which are often definitive of minimal living, don’t help you much. You don’t build anything by hoarding.

“More focus needs to be placed on how you can save without impairing your financial growth. For instance, investing in bonds or a 401K plan with your savings is way better than sitting on your savings while attempting to live on the bare minimum.”

Find Out: Why You Should Start Budgeting Now for 2022

You May Ignore Your Health

“Health comes first,” said Elice Max of EMUCoupon. “I know a number of people who skip their medical appointments and avoid treatments they believe don’t come under their plan. Some people do this out of ignorance as they are unaware of the health benefits they can receive. Neglecting regular checkups means you’re setting yourself up for bigger problems down the road. And in many unfortunate instances, these problems are extremely costly.”

Instead, become familiar with your health plan’s benefits and make regular checkups a priority.

Discover: What Counts as Taxable Income?

Being Cheap Means You May Buy Items You Don’t Like Just To Save a Little Bit

“I had a roommate who would buy no-name ketchup, mustard and condiments that I thought tasted terrible,” said John Frigo, a proponent of the FIRE movement and eCommerce manager with Best Price Nutrition. “It maybe saved us like 30 cents, but every food I ate with it, I didn’t enjoy to the fullest because I had garbage condiments. What’s the point of saving 30 cents — especially if it’s going to make me not enjoy the $10 worth of hot dogs I bought. To me, something like that isn’t worth the savings or sacrifice.”

Instead, only buy the cheapest items when it makes sense. For example, if you like the item and it won’t break or wear out due to being cheap, buy it. However, if you don’t like it, don’t buy it.

Check Out: Are You Spending More Than the Average American on 25 Everyday Items?

You May Need To Replace Lower-Quality Items More Frequently

“Cheaper things will break more often and need to be replaced sooner than higher-quality items, and this might cost more in the long run,” said Becky Blake, founder of TwentyFree. “You could buy one pair of high-quality shoes for $100, and wear them for longer than five pairs of $20 shoes would last you. If you’re an extreme cheapskate, you might even buy shoes that don’t fit as well and hurt your feet just because they are on sale. Plus, you’d be wasting time shopping for all those pairs of shoes and you could be tempted to make impulse purchases while you’re at the store, which would actually cost you more money.

“Use coupon browser extensions while you shop online. These extensions such as Rakuten, Honey and RetailMeNot will automatically search for coupon codes, sales and cashback when you are shopping online. This will save you time and money, and you’ll only purchase what you set out to buy in the first place because you aren’t going into a store to be tempted by impulse or sale purchases.”

Related: The 10 Best Fitness Apps To Replace Your Expensive Gym Membership

You May Waste Time (and Gas)

“Another great example is my grandparents who will drive all over town to go to three grocery stores to save 15 cents on bread,” said Frigo. “They’re wasting more in time and gas than they’re saving on bread … it kind of reminds me of the people who drive 30 minutes out of their way, wasting time and gas, to save 10 cents a tank.”

Always consider whether the savings you’ll reap is worth the time and money you’re spending to get that savings. If it’s not, move on.

Find Out: How Spending Money in These 10 Ways Will Actually Make You Happier

Find a Balance Between Saving and Spending

“While frugality can help you save more money in the long term, it’s important to find a balance,” said Alissa Van Volkom, head of consumer deposits, products and payments at TD Bank. “If you’re too rigid with your finances, it could lead to money mistakes like splurging, or it could impact your personal happiness. Focus on saving money and sticking to a responsible and realistic budget, but give yourself room to spend money on areas like leisure and personal interests. Check in with your finances regularly to update goals and priorities or redefine what is important for you over time. Establishing a balance between saving and spending will provide a stronger financial foundation with the flexibility to evolve as your life progresses and your needs change.”

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Last updated: Oct. 22, 2021

This article originally appeared on GOBankingRates.com: The Real Cost of Being a Cheapskate