Sometimes buying the cheapest services and items can actually cost you more in the long term.
“There is a big difference between being financially prudent and trying to save money by taking short cuts and picking the cheapest product or service,” says Eunice Sibiya, Head of Consumer Education at FNB.
Herewith a list of when you should avoid penny-pinching, that will save you in the long term.
Buying in bulk
Buying in bulk may seem like a great idea, goods are usually cheaper in bulk, but it doesn’t mean that it will necessarily save you money in the long term.
“It is easy to get swept away when you see the lower prices of bulk products, but go through a few check lists in your head such as, do you have storage space for it, what is the expiry date and will you end up consuming more just because you now have a product that is easy to access?” Says Sibiya.
Don’t be tempted to buy luxury consumables in bulk such as chocolates, biscuits or soft drinks.
“This will lead to consuming more of these products than you would usually do, if you buy them individually as a treat,” warns Sibiya.
Only buy product in bulk that you use on a regular basis and check the expiry date.
“A low discount on tinned chickpeas may seem great at the time, but unless you know your family eats chickpeas on a regular basis you will soon be stuck with tins of produce that have expired, take up space and ultimately need to be thrown away.”
Stick to items that you use regularly, such as household cleaning products, that you know you won’t end up using more of, just because they are in easy reach.
“Cutting out vital insurance such as car, household or life policies to try save a buck or two is very risky,” warns Sibiya.
Take a hard look at your circumstances. If you are young and single without a car or home, you may be able to get away with no insurance.
However, if you have responsibilities such as a family, car and home or household goods, it is never worth the risk to skip or skimp on insurance.
“Insurance is financial protection against the possibility that an event or situation will leave you or your family financially worse off,” says Sibiya. “You are insuring against something that may never happen, but if it does, you could stand to lose something you have worked towards for a long time, such as your home, car or even a holiday that you have spent months saving for if you haven’t taken out travel insurance.”
If you aren’t insured in anyway, you need to take a look at your circumstances and remedy this as soon as possible.
Using cheap services
Taking the cheapest option for any services, from redoing your bathroom to servicing you car, is not always a good idea.
“Rather see the service as an investment,” says Sibiya. “If you want your geyser to still be running smoothly in a few years time or your car to get you safely from work to home, it is better to use a reputable service provider that may be a bit more pricey, but can guarantee their work, rather than a fly by night that won’t take responsibility for their work,” warns Sibiya.
Trying to take cheaper short cuts isn’t always in your best financial interest.
“Take stock of your spending habits, and understand whether you are actually saving money when you settle for the cheaper option, or if you are costing yourself more in the future,” concludes Sibiya.
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