Being frugal doesn't just mean saving money; it means spending your money wisely. That also means some things may be cheap now, but actually cost you more in the long run -- it may make sense to spend more now for a better, longer-lasting experience. Let's take a look at when it makes sense to splurge now to save later.
How Frugality Really Works
Frugality, like productivity, isn't just about being thrifty and saving loads of money -- it's about spending wisely on the right things so you have the money for the things that are important to you. The aim is that you're able to easily save for your goals because you've made smart buying decisions now. That means you have to consider the long run.
Doing this takes more thought than you might think. It's easy to get caught up in just buying the cheapest serviceable version of whatever you need, as long as you keep "saving money" in the front of your mind. Unfortunately, buying cheap can lead to spending more down the line -- whether it's for maintenance and upkeep, or replacement costs when you have to buy the same cheap thing over and over again. If you really want to save money, there are some times when it makes sense to spend more money so you don't run into those costs.
When It Makes Sense To Spend More
There are two main factors you have to consider when you're making a buying a decision -- whether you're shopping for a pair of jeans, or you're buying a home: Price and Quality. It's easy to cut corners where you think it's an unimportant purchase and go just for price, or blow out your budget on quality because you think you should.
As Peter Anderson explains in this piece, most of us fall between the two:
I tend to go for the cheap things when it comes to things I don't care about, or when it comes to things that are of comparative quality regardless of price. For things that vary greatly in quality, I tend to come down on buying the quality item instead. After all, just because something is cheap, doesn't necessarily mean that it's frugal. If the cheaper item wears out before it's time you're going to be spending more money to replace it.
As an example, you may think that consumables like cleaning supplies or toiletries are safe to go cheap on, but if you wind up buying more of a cleaning product to get the same effect as one that's a bit more expensive, you're actually wasting money. Here are some of the most notable examples of this phenomenon:
- Cars, bikes and other modes of transport: When you're ready to buy a car, a bike, or invest in any other method of getting around, buying cheap for the sake of saving money is always a bad idea. Total cost of ownership -- including maintenance, repairs, fuel, storage or parking, and other costs also play into your budget. It doesn't take much imagination to see someone spending little on an affordable vehicle only to find out it needs costly repairs, after-market upgrades, or is a notoriously expensive vehicle to maintain. High-end luxury doesn't equal "better" either, but making sure you consider additional costs and put your money to the features important to you is important.
Homes: Buying a house isn't the time to skimp on the little things -- especially if those little things make a big difference in how much you'd spend to maintain or repair your home in the future. Similarly, it's important to remember that some house features (size and location amongst them) aren't things you can easily change later on. Skimping on one of them now may mean you're dissatisfied later.
Get a home inspection, do your research, and learn as much as you can before you decide on a property or an apartment "because it's a steal at this price".
- Bags, wallets, purses, luggage and other carry-alls: Wallets, bags and other carry items are things you trust and depend on every day. Sure, to some extent they're commodities -- but buying quality means you'll spend less in the long run replacing them after they have worn out. There's a big difference between well-made luggage and cheap luggage, the same way there's a big difference between a plastic wallet from the department store and something hand-crafted to last a lifetime.
- Appliances and energy-efficient products: Spending a little more on kitchen and household appliances means you get an energy efficient, reliable product that can save you money in the long run. Basically, you have a little maths to do before deciding how much to spend. Factor in your budget, along with how long you plan to own the appliance, and then look at its cost of operation.
- Furniture: We've discussed how cheap furniture usually isn't worth buying, because it will either fall apart or cost you more money to repair. The bottom line is that you should buy based on how frequently you use a piece. Acquiring a cheap couch is going to wind up making you miserable if you spend a few hours on it every night, and skimping on a bed and mattress will make you miserable no matter what. It makes more sense to buy long-lasting, timeless pieces that are sturdy enough to move with you than it is to re-buy every time you move, or every time your desk falls apart.
This isn't an exhaustive list by any means. If you're big on building your own computers, you may consider buying high-end components and futureproofing your rig as much as possible so you don't need to upgrade quite so often. You have to find that sweet spot between cost and quality (or longevity)
Avoid The Culture Of Commodities
We live in a world where just about everything can be affordably purchased, disposed of, and re-purchased. It's easy to think of just about everything as a commodity, because everything we could want or need is so readily available, as long as we can afford it. However, the key to being frugal is to resist that kind of thinking.
Just because you can run out and buy a new suitcase for your next flight doesn't mean you should, especially if you have something that works. If you do wind up buying a new one, a frugal person would make sure they got one that could last the next dozen flights, not just through the next trip. It's all about playing the long game.
Making that shift in mindset isn't difficult, but it does require research. You'll need to do your homework when shopping, which means doing more than just reading reviews, and learning which types of reviews to trust.
Lifehacker's Loaded column looks at better ways to manage (and stop worrying about) your money.