Are You Taking Frugal Too Far?

A frugal lifestyle has many benefits. Above all, it gets you in the habit of saving. You learn the value of planning and spend less when you make purchases by avoiding interest payments. That said, it's possible to take frugal too far. Look out for five common traps of being "cheap."

1. Stressing Excessively

The whole point of avoiding debt is to have less stress, not more. Penny pinching has gone too far if you feel guilty or anxious every time you need to buy something.

Sometimes, it makes sense to choose convenience over price. If you need fast breakfast options to get your kids to school on time, picking up that box of cereal is smarter than making granola from scratch.

2. Letting Your Budget Control You

Smart saving is about more than the bottom line. It’s about being in control of your life. You don’t want FOMO to dictate how you spend your money, but your budget shouldn’t either.

Is buying a gift for a friend a waste of money? Not if it helps you build lasting connections with the people you love. Good budgets are adaptable, leaving you some wiggle room each month.

3. Falling for the Discount Trap

Coupons and sales are marketing tools stores use to convince you to spend more money, not less. Discounts are great, but only if you have enough self-control. It’s one thing to save $10 on frozen chicken breasts that your family will use. It’s another to end up spending more than you wanted for clothing items you don’t really need.

4. Spending Too Much by Spending Too Little

Cheap options can end up costing you more in the long run. A used car with 200,000 miles may seem like a frugal option, but it’s not if your car needs repairs constantly. The same goes for driving 20 minutes to save five cents per gallon on gas. To save money correctly, you need to focus on value more than price.

5. Using Too Much Time To Save a Little

Time is money. Before you waste hours of your time on something small, ask yourself this: “How much money would I make by putting in those extra hours at work?” Assign a dollar value to every hour when calculating the cost of “do it yourself” versus “just buy it.” The results may shock you.

Does DIY Always Make Sense?

Imagine that you need a new dresser and are thinking of building one yourself. You have enough experience, so the project will take you five full workdays (a low estimate). Plus, there’s the cost of plywood, boards, finish, brackets and accessories, assuming you already have the tools required. Just in materials, you're looking at $250–$350.

That’s are less than at furniture outlets! What savings, right? Well, not when you correctly factor in the value of your time.

If you make $15 an hour working from home, five workdays mean another $600 in your pocket. Is it worth the effort to save $200 instead of buying a professionally made dresser that probably looks better and lasts longer? And that’s assuming nothing goes wrong during the project.

The Key To Smart Frugality

Frugal and cheap are two different things. Being frugal means using your money wisely, not wasting it. It’s good to save, but you should also enjoy living.

Use your finances to take advantage of wise investment opportunities. Budget to have money for the important people and moments in your life.