10 Ways That Being Frugal Can Actually Cost You Money

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Things Worth Paying More For

By Allison Martin

It pays to spend less whenever you can, right? Well, not necessarily. There are some cases where the "less is more" principle doesn't work.

Being cheap cuts costs for the moment, but may cause you to incur additional expenses in the long run. That ends up being the antithesis of frugality. Here are a few instances where thriftiness can backfire:

1. Couponing

As an ex-couponer, I know all about this. I remember sitting at the dining room table every Sunday afternoon cutting away at the weekly circulars and matching the coupons from my ridiculously large collection to the sale items. I saved a ton of money, but I also ended up with a massive stockpile of items for which I had no real use.

The moment of truth came when I headed to my stockpile, only to realize I had accumulated six jars of mayonnaise and 18 sticks of deodorant, which I likely wouldn't use before the best-by date. That's not to mention the hours of my life spent clipping away that I could have used to generate additional income. The choice is yours, but I suggest you conduct a cost-benefit analysis to determine whether the hours spent on couponing are worth it.

2. Adopting a Deprivation Budget

When you create a budget to curb spending and reach financial goals, it may be tempting to jot down the leanest figures imaginable. But what will you accomplish if you severely underestimate your expenditures? I understand cutting costs, but being unrealistic means your spending plan will fail. For example, if you typically spend $600 at the grocery store for a family of four, what sense does it make to shave that number all the way down to $200? The answer: None at all. Need help learning to manage your money? Check out "How to Develop an Effortless Budget You'll Stick to."

3. Cutting Corners on Insurance

Are you riding the wave of luck when it comes to your insurance policies? Do you carry the bare minimum level of auto coverage your state requires? Or perhaps you've signed up for mediocre health, dental, homeowners or life insurance policies. You may have done these things to keep premiums low. But if an emergency arises, your wallet and bank account could be turned upside down by out-of-pocket costs and exorbitant deductibles.

4. Ignoring Routine Medical Visits

Ever heard the phrase "an ounce of prevention is worth a pound of cure"? Keep that in mind the next time you're tempted to skip a visit to the doctor or dentist. Even if you dread doling out cash for co-pays or meeting deductibles, it's worth it to stay on top of things. Just think about those individuals with debilitating medical conditions who could have detected them earlier -- when they were more treatable -- with routine blood work. Others ignore dental visits for so long that they now must live with gum disease and costly deep cleanings for the rest of their lives.

5. Buying Inferior Big-Ticket Items

If frugality is deeply embedded in your genetic makeup, it's no surprise that big-ticket items with low sticker prices may be enticing. However, cheaper is not always better, especially in this situation.
A perfect example is the purchase of a cheap car. It may look good, smell great and be priced at an incredible point, but snagging this "good deal" could leave you with a clunker. Car leases can work the same way. You cut costs for the life of the agreement, but end up where you started when it's all said and done.

6. Avoiding Car Maintenance

It's imperative that you schedule routine maintenance to keep your car running. According to Bankrate.com: "Postponing maintenance is the No. 1 car maintenance mistake, according to research by CarMD.com, which polled certified master technicians. Of the top 10 maintenance mistakes in the firm's study, four of them were related directly to regularly scheduled car maintenance and could be avoided." Avoiding the mechanic may shelter your wallet, but could put your life at risk.

7. Cutting Back on Nutritious Food

You may be tempted to reduce the presence of healthy, costlier foods like fresh produce in your family meals. But replacing nutritious food with less expensive fillers or processed foods can be bad for both your waistline and overall health. Need tips to reduce spending at the grocery store? Check out "9 Tips to Cut Your Grocery Bill by Up to 50 Percent." We've also explained how to save when you're spending on meat and how to make less expensive (but nutritious) food much more palatable.

8. Frequenting Deal Websites

These are what I like to call the forbidden fruit. When websites like Groupon and LivingSocial burst onto the online scene, Americans were in a frenzy. According to Forbes: "Sure, Groupons can save you hundreds of a dollars a year if used right, but they also come with plenty of risks attached. You could risk the fear of double-booking yourself, as most of the Groupons run by dates. Then, you would be missing out and losing money, to boot." I'm no exception. I got sucked in and vowed to myself that I'd buy just this one thing. But it turned into a lot of fine dining vouchers, spa treatments and weekend excursions, some of which I didn't even use.

9. Shopping at Warehouse Clubs

This is another area where doing it properly can produce major savings. These businesses pride themselves on selling you massive quantities of a particular item at a discounted rate. But what happens if you can't consume it all before the expiration date? And let's not forget about the membership fees and the storage space you will need at home.

Plus, have you compared the per-unit price? Are you sure you're always getting a better deal?
According to Today.com: "Customers may believe they're paying for a chance to save money, but some experts think membership fees actually cause consumers to spend more."

10. Raising Your Deductibles

This one is also insurance-related. It's often said that you can reduce the cost of insurance by raising the deductibles. But what's the point of raising your deductible so high that you don't have enough money in the bank to cover it if you need to? Will you have to borrow the money and pay interest? Don't set a deductible that's higher than you can afford to pay. You can always revisit the deductible after you have a healthy emergency fund in place.

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