When it comes to saving money, you need to do more than just save it all and put it under your mattress. Cash in a coffee can doesn’t accrue interest, and it doesn’t reflect on your credit as good saving habits, either. Frugal living is a good thing, but it can be taken too far. Here are a few common ways frugal living can turn into a liability instead of savings.
If you’re hesitant to invest your money, you’re leaving a lot of unearned interest on the table. Sure, cash might be king—if it’s 1914. Here’s the thing: you live in the modern world, and money can make you money. Even if you only have a bit to invest, it’s smart to get your money into some kind of position to earn interest.
Mutual funds, stocks, bonds, savings accounts: whatever you think is right for your situation is what you need to look into. Money under your bed is just sitting there. Money in the stock market is making you money. Don’t waste money by just saving it to no end. Have a plan and a mission for your money!
It can be tempting to just buy the least expensive items, all the time. The least expensive clothes, electronics, cars, shoes. However, you might find out that buying the least expensive item isn’t the best way to spend your money. Picture this: you buy a ten-dollar pair of boots. However, they’re worn through in a short three months.
If you’d bought a ninety-dollar pair of boots instead, you’d be able to wear them for five years before they came apart. Over that same five years, you’d have spent $200 on the ten-dollar boots! So, not only would you be spending more, you’d be wearing uncomfortable, poor-quality boots, too!
It’s very easy for someone living a frugal lifestyle to find themselves burning out on always saving money instead of spending it. There are so many fun things to spend your money on, after all. Why not get that new electronic device you want? Why not buy that new car?
If you don’t save with a plan, this is an easy trap to fall into. That’s why investing is so important, as is having a robust retirement savings plan. Beyond that, you could use methods like crafting a budget or using a cash diet to keep yourself honest when it comes to how much you’re spending or saving!