One of the most frustrating aspects of trying to save money is when you think you are saving, but in reality you’re wasting money. This usually happens when you have made bad assumptions when making a purchase or you haven’t analyzed the true costs of a purchase.
Here are five common ways people waste money when they actually believe they are saving it:
1. Buying gas at the least expensive gas station.
While this would seem obvious, the problem occurs when the least expensive gas station is a few miles off your regularly traveled route. If you are driving across town to save a few cents per gallon, the cost of driving to get the better price will negate any savings the cheaper gas price provides.
Solution: Choose the least expensive gas station that is no more than a mile from your regularly traveled route. You can keep informed on which gas station is selling gas at the best price at such sites as Gasbuddy or MSN Gas Prices.
2. Going to different stores to get sale items.
People often believe that they are saving money by looking at the weekly discount ads that stores send out and finding the best price for each product they need. The problem is that by driving all around town to the different stores, you waste all of that savings on the cost of operating your car.
Solution: Find the closest store that will price-match. While many stores don’t advertise that they will price-match, a fair number of stores still do. You may need to ask the manager to confirm whether or not the store does. Once you have located a store that will price-match, simply buy everything there and bring in the competitor’s ads to get the best price.
3. Buying the cheapest instead of the best value.
People often confuse the least expensive price with the best value. Unfortunately, the products with the least expensive prices are often a poor value. While price is an important factor that contributes to value, it isn’t the only factor that one needs to consider.
Solution: Look beyond price when you purchase a product. Consider how long you need it to last along with its price. Other factors you should consider that can contribute to value include quality, design, warranties and repair costs. By taking all these factors into consideration instead of focusing exclusively on price, you are much more likely to walk away with something that will be of value.
4. Purchasing items on sale.
Purchasing items on sale is a great way to save money if they are items that you would have purchased anyway even if there hadn’t been a sale. The problem is that many people purchase items they would have never purchased except for the fact that they were found on sale.
Solution: When purchasing items on sale, only purchase those items that you would eventually purchase at full price. If it is something that you would not normally purchase, then don’t.
5. Buying in bulk.
While buying in bulk can reduce the cost per unit of the item you’re purchasing, it only saves you money if you consume all of it and consume it at the same pace you would if you had a lesser amount in the house.
Many times when people purchase in bulk, a good portion ends up in the trash because it goes bad before it can be used. On the other hand, some items, such as candy, often get consumed at a much faster pace when there is a lot of it around than when there isn’t. Either of these scenarios can make purchasing in bulk more expensive, even with the lower unit price.
Solution: Take the time to make sure you carefully consider an item’s shelf life and how it will be consumed before buying it in bulk. To solve these issues, consider buying in bulk with friends so that you get the better price yet take home a unit size that avoids these problems.
There are many ways that we fool ourselves into believing we are saving money when in reality we are wasting it. It’s important to look beyond the initial assumptions and take a critical look at the cost of all that we purchase. When you take the time to do this, you’ll know that the savings you get are real.
By Jeffrey Strain, Special to TheStreet.com