13 money-saving tips that can be misleading
<p><strong>Differentiating bad advice from good</strong></p>
<p><span>People love giving advice, especially when it comes to saving money. However, that doesn’t mean you should believe in every piece of advice you hear. After all, following the wrong money-saving tips can actually cost you in the long run. To help you differentiate bad advice from the good, we made a list of 13 money-saving tips that actually don’t pay.</span></p>
<p><strong>Getting suckered into buy-one-get-one (BOGO) deals</strong></p>
<p><span>When it’s genuine, it is hard to resist. Whether it’s BOGO free or BOGO half price, you have to stop and ask yourself: would I really have bought this much of this item at this price anyway? If you’re shopping for jam and see BOGO free on jam, that’s probably a great time to stock up. But if you’re looking for a new pair of runners and see BOGO half off, stop and think. You went out looking to spend $60 on runners. Now you’re spending about $100. Did you even want two pairs? Will you wear them both? Do you even like the second pair?</span></p>
<p><strong>Building an emergency fund but not contributing to super</strong></p>
<p><span>It’s essential these days to have an emergency fund. Financial experts say you need six months to one year’s worth of expenses. But experts also agree that you need to look after your financial future. If you’re squirreling money away into an emergency fund or savings account but not putting money into a super fund or another long-term plan, you’re not preparing for something you know is coming: old age. And with compound interest being what it is, every day you put it off is dollars wasted. When it comes to saving, the simpler, the better. And what could be simpler than ‘The $5 Savings Plan,’ i.e. stashing every $5 note that comes your way? It’s a surprisingly effective way to put some money aside. A Boston Globe writer who stuck with the plan saved $12,000 in three years.</span></p>
<p><strong>Always choosing the cheapest price tag</strong></p>
<p><span>I’ve said it before, I’ll say it again – buy cheap, buy twice. If you buy a screwdriver set for $1 at a dollar shop or get your shoes for a few bucks at a flea market stall, chances are you’ll be buying them again real soon. Cheaply made, poor-quality items may save you a few bucks in the short term, but you’ll only have to pay more later to replace them. And if you replace them with more cheap junk, you’ll be repeating the cycle. The only time this is not true is when you’re buying generic brands in the supermarket – you’re often getting the same product that’s in the brand-name packaging.</span></p>
<p><strong>Taking store credit card offers for discounts but paying the minimum</strong></p>
<p><span>That 30 per cent off is a good deal, if you actually pay off the balance in full right away. Sadly, many people find it way too easy to pay the much smaller minimum payment. Before long, you’re paying the minimum every month and adding more to the store card, and you’re suddenly a credit card revolver who is paying hefty interest charges.</span></p>
<p><strong>Not putting money in the parking meter for quick outings</strong></p>
<p><span>You may be a world-class speedy shopper or errand runner, but everyone’s luck runs out sometime. Chances are you’ll eventually get a ticket, which can run you anywhere from $45 to well over $200 in some cities, depending on where you live.</span></p>
<p><strong>Buying food in bulk and throwing half of it away</strong></p>
<p><span>When you see a whole bunch of bananas on sale for less than half the regular price, you grab them. Then you watch them turn black because you bought too many. While buying in bulk is good for lots of things, be careful when buying perishables. It’s not a bargain if you throw them away.</span></p>
<p><strong>Avoiding regular visits to the dentist</strong></p>
<p><span>It’s something I did as a student when money was tight. Well, after skipping regular cleanings and check-ups for a few years, I needed a bunch of costly fillings. Now I have a dental plan that covers check-ups, but even if you don’t, get to the dentist. It’s a lot better to pay for a visit now than to pay for major work later.</span></p>
<p><strong>Putting off investing until you're 'rich'</strong></p>
<p><span>It might be hard to think about investing when you’re not making a lot of money. After all, shouldn’t you wait until you’re well-established in your career to start thinking about that? Well, not really. Even if you just started out in your career, it’s never too early to start an investment account. According to </span><em>Listen Money Matters</em><span>, a Betterment (fixed-term) account is a good option for people who are just starting their portfolio.</span></p>
<p><strong>Avoiding all debt</strong></p>
<p><span>You probably know that an unpaid credit card balance or high-interest loan can significantly hurt your credit score. However, that doesn’t mean all kinds of debt will. According to </span><em>Fidelity</em><span>, certain kinds of debt with low-interest rates (like mortgages) can actually help you achieve your personal goals without harming your credit score in the process. While you should still try and make sure you pay your credit balance in time every month, there’s no harm in keeping an open mind when looking at loan options.</span></p>
<p><strong>Trying to buy a house as soon as possible</strong></p>
<p><span>Most of us regard owning a property as a sure sign of being established. However, rushing into buying a home can actually do more harm than good. Ending up with a mortgage that you’re struggling to pay off, or receiving a great job offer in a different city when you’ve already bought a house can actually harm your finances. After all, there is no harm in renting an apartment until you’re absolutely sure about your future plans.</span></p>
<p><strong>Depending on credit cards instead of an emergency fund</strong></p>
<p><span>One of the biggest financial mistakes you can make is to depend on a credit card during an emergency. Yes, you can put an unforeseen expense, such as an emergency bill, on a credit card and pay it later. However, thanks to interest, you’ll end up paying back a lot more than you spend. Your best bet in preparing for a real financial emergency would be building up an emergency fund, preferably consisting of three to six months’ worth of living expenses.</span></p>
<p><strong>Not sticking to a budget</strong></p>
<p><span>When you’re making enough money to cover your expenses, budgeting can seem unnecessary. However, without a budget, it’s easy to lose track of how much money you’re spending. To avoid spending yourself into debt without realising make a monthly budget and stick to it.</span></p>
<p><strong>Avoiding credit cards</strong></p>
<p><span>There’s no denying that credit card debt is harmful to your finances. However, that doesn’t mean you should avoid getting a credit card. As long as you pay your balance in full each month, making purchases with your credit card can be worthwhile.</span></p>
<p><span><em><span style="font-weight: 400;">Written by Paul Michael</span><span style="font-weight: 400;">. This article first appeared in </span><a rel="noopener" href="https://www.readersdigest.co.nz/culture/13-money-saving-tips-that-can-be-misleading" target="_blank"><span style="font-weight: 400;">Reader’s Digest</span></a><span style="font-weight: 400;">.</span><span style="font-weight: 400;"> For more of what you love from the world’s best-loved magazine, </span><a href="http://readersdigest.innovations.com.au/c/readersdigestemailsubscribe?utm_source=over60&utm_medium=articles&utm_campaign=RDSUB&keycode=WRA93V"><span style="font-weight: 400;">here’s our best subscription offer.</span></a></em></span></p>
