6 scenarios where being frugal simply costs more

Generally, saving money is a great idea.

Most of us would be better off if we were more frugal.

However, there are times when it doesn’t pay to be frugal. Here’s six examples where the costs outweigh the savings.

1. When the savings are minimal

Sometimes the savings are so tiny that it simply doesn’t pay to extend the effort. Most of our expenses can be trimmed here and there, but the savings are too small to make the effort worth while.

It’s also important to distinguish between regular expenses and infrequent purchases. For example, regularly buying soda and snacks from convenience machines is expensive. The premium for the convenience is simply too costly. However, the added cost from an occasional purchase is fairly minor, insignificant enough that it might not be worth depriving yourself.

2. When your time is more valuable

For some people, their time is far more valuable than the average person. For these successful and wealthy people, attempting to trim costs simply isn’t worth the effort. For every hundred dollars trimmed from their budget, they might be missing out on thousands in income.

In a similar way, everyone can point to an experience or activity that is worth every penny. For married couples with children, it might be a date night. Others might prefer to pay someone to maintain their lawn (or not). The key is that the experience enriches your life in a way that saving the money could not.

3. When you have bad financial habits

While almost everyone can benefit from frugal habits, some people have bigger fish to fry. Expecting a spendthrift to be frugal is like asking a student to take calculus before algebra and geometry. The student will fail.

People accustomed to living beyond their means are more likely to embrace reasonable, moderate reforms than deprivation.

4. When you don’t earn much

Of course, some people live beyond their means because they earn too little. When you’re just scraping by, you have to be frugal. However, focusing your energies on being thrifty is a mistake.

The solution to low income is not lower expenses, but higher income! Focus on getting an education or developing skills that will allow you to earn more.

5. When it costs more in the short run

Some products and stores offer significant savings when you buy a lot up front. For some people, buying in bulk makes a lot of sense. If you have the space and the money up front, there are savings to be had.

The key is to spend your money, not the credit card company’s. If you carry a balance on your credit card, spending more to buy in bulk probably isn’t saving money.

6. When “doing it yourself”

A lot of us enjoy do-it-yourself projects. We often rationalize that we’re saving money which is true if:

1. we can do it safely
2. we can do it well
3. the savings outweigh our time’s value

Otherwise, you’re probably better off paying someone to repair your car, house, etc.

What frugal activities do you find worth your time? Which ones aren’t worth it?

This article was featured in the Festival of Frugality hosted by Mrs Micah.
Photo by Colin Rose