Money-saving tips that actual cost us money
Money-saving hacks, bulk bargains, couponing, insurance pitfalls, and company loyalty that's costing you money in this newsletter edition.
So it’s September, the real new year and I haven’t bought a new notebook. That’s a big deal for me.
Anyway, this isn’t a newsletter about school savings because you’ve been bombarded by all the marketing for the last six weeks or so. This newsletter is based off a press release from Bountii, a team of bargain hunters, deal finders, and savings enthusiasts. The release was called “Money-Saving "Hacks" That Cost Twice As Much In The Long Run.”
Now, I usually don’t pay that much attention to releases like these because they’re various iterations of ‘spend less, save more’ but I skimmed it and there was some good stuff there. I’m going to share some of their tips and some of mine.
Buying the cheap version of everything
It’s similar to the "Sam Vimes 'Boots' Theory of Socioeconomic Unfairness" which is a concept introduced by the author Sir Terry Pratchett in his book Men at Arms.
In the book, Vimes notes that a good pair of boots costs 50 dollars and could last a person for ten years. However, a poor person can only afford cheap boots, which might cost 10 dollars but only last a year. Over the same ten years, the poor person ends up spending 100 dollars on boots (10 dollars each year for 10 years), while the rich person only spends 50 dollars once.
Basically, when you buy something cheap, it may fall apart faster or need more frequent repairs. This means you end up paying more money in the long term either replacing or repairing the item.
Buy what you can afford but if you can, don’t default to the cheapest item as it could be the most expensive over time.
Bulk “bargains”
I’ve talked about buying in bulk before as a single person. It’s often touted as a great way to save money but items may spoil before you use them, wasting money, and you may not have the storage space.
Bountii also says the same and points out that the individual unit price of each item may not be cheaper than buying one of the item.
Couponing
I don’t coupon because I don’t have the patience but some friends are avid couponers. Bountii points out, ‘Although coupons claim to be a great money-saver, many of the items manufacturers make coupons for are their high-markup brands. It’s also common for coupons to have restrictions and limitations which can end up making them useless, and it’s a waste of money to buy things simply because you’ve found coupons for them.’
Here’s mine:
Skipping insurance
Skipping or reducing insurance coverage to save on premiums can backfire if you face an unexpected event like an accident, illness, or natural disaster. The costs of dealing with these situations out-of-pocket can be devastating and far outweigh any savings from lower premiums.
Now, taking a higher deductible can save you money but don’t do that just to save some dollars. Make sure you can afford the deductible.
Skipping maintenance to save money
Skipping routine maintenance on your car, home, or appliances to save money can lead to more significant, costly repairs down the line. Regular maintenance can prevent major issues and extend the life of your belongings.
Croissant, Rakuten and Honey
I use Rakuten when I shop online to save a few dollars here and there and I’ve been tempted to spend more when there’s a 10 per cent cash back offer.
The perception of saving money or getting some cash back when you sell on the item can make us justify additional purchases or splurges. So you spend more than you planned. So when a bunch of fashion substackers start touting something that looks like it would save money, take a closer look.
Company loyalty
Oh yes. Stay with me. Staying too long at a company can hurt your finances. You do have to balance time spent with job hopping as companies do look at the average time spent at a job.
Your finances can be impacted by the length of stay because you could be missing opportunities that pay better with a higher salary.
However, if you’re being promoted at your current company, you’re probably ok. Take the time to figure out your situation.
This week’s readings:
What happens if you don’t use your credit card? (MoneySense)
I Got A Birth Chart Reading To Help Ease My Financial Anxiety (Bustle)
A gap year is a privilege that we can no longer afford (NSS Mag)
Taking a gap year during your education? Here’s how to make the best financial plan (Toronto Star)
Another Day Older and Deep in Debt: The Fiscal Implications of Demographic Change for Ottawa and the Provinces (C.D. Howe Institute. PDF)
Should you borrow against your life insurance policy? It depends, but beware the risks (Toronto Star)
By me: One third of Canadians are using AI to manage their investments. Just beware of hallucinations. (Toronto Star)