Do you ever have the feeling like a bargain isn’t everything it seems, or that in the long run you might not be any better off for making a money saving purchase? False economies are when you pick up a good or service at a saving, but actually it leads you to spend more overall. The nature of false economies, where you get a saving at the point of sale, and the impact of them not always being felt immediately, can make them notoriously hard to spot.
The classic embodiments of a false economy would be something that you buy cheaper only to replace it more often, often because it becomes defective faster or you have to use more of said item to make up for the lack of quality. However, false economies might also extend to financial decisions that lead to hardship later (such as taking out debt incorrectly), or even making a purchase that negatively impacts your life and productivity in some other more indirect way.
So how can you identify them and what can you do to avoid false economies?
The key is to regularly question internally whether a purchase is or was appropriate. Do this for purchases or decisions you are about to make, and also critically appraise decisions you have made previously (a classic for this is questioning whether a car was the right call after the fact for instance). Ask yourself questions like:
- Do I know what the quality of this is?
- Is it the best I could get for the price?
- Is this going to last long enough for the price?
- Will this last significantly longer for an insignificant further investment (e.g. if a 12p loo roll is 1ply and I have to double up, would a 14p 2ply roll be a better use of the money?)
- Is this decision going to lead to me paying more in the long run? (e.g. taking out insurance a monthly direct debit which normally costs more)
So what are the products or services that harbour my top false economies? Bear in mind these are very personal, and just might not be the case for everyone.
This is perhaps the least obvious one. When you have a bad bed, no matter the cost, you invariably end up having disturbed sleep, or carrying aches and pains around with you during your waking hours. These negatively impact your mood, the way you respond to the challenges of the day, and ultimately impact your productivity. To put it simply, if you aren’t behaving as frugally as you could be because you are nursing a crick in your neck all day long, then the bad bed is costing you money.
I will also dispel a myth here. A lot of people spend thousands of pounds on their sleeping arrangement, which I imagine is necessary for some. But I would challenge that you can get a good sleeping setup for less than £500. We shopped around for months for our current bed, and ended up with the recently released IKEA Morgudal mattress which is only £200 for a king! It has various layers of memory foam and normal foam to give a really comfortable firm sleep. We love it.
Also, don’t forget to spend the piddly amount needed on a mattress protector. For the small add on price these really can make your mattress last so much longer by protecting it from smells and stains for years.
This is a highly personal one but is something to watch out for if you have kids nonetheless. When our daughter was around 1 year old, she was in size 4 nappies, and we were using ALDI nappies. She got a frustrating bout of nappy rash that was really irritating her, and she really struggled to kick it. We tried all sorts of creams, lotions and prescription medicines as well as changing our routine and changing wipes. Nothing worked. Then in the middle of the night when she just wouldn’t sleep because she was red raw, we caved and went to the out of hours GP. He didn’t give us any new prescriptions, just said “have you tried using different nappies?”. In particular he described that other nappies are better for keeping the wet nappy material away from the skin and therefore avoiding irritation.
We tried pampers (they really do swell in a way that leaves little air channels around the bottom) without changing anything else, and the nappy rash cleared up in about a week. It was incredible. Obviously we were kicking ourselves that our frugality might have led to this, and not every kid may have as sensitive a bum as ours, but we definitely spent more on all the creams and prescriptions than we ever have on the increased cost of the nappies (a difference of about 12p to 15p per nappy).
#3: Contracts for the newest phone handsets
This one should really be a no-brainer, but the number of people who fall into this trap is staggering. The amount of people that you hear say things like, “I can get the new iPhone for £40 a month! That’s less than I pay now”. It doesn’t matter to people that the contract has extended from 18 to 24 months or that they have to outlay a load at the start as well. Phone contracts for getting your hands on the newest handsets are borrowing at a really high rate of interest. The culture around phones has led to a lot of people not thinking of this as debt, but it is, and if you sit and do the maths, you are paying WAY MORE for the phone over the life of the contract than if you bought it outright from the manufacturer.
If you have the cash, you really should consider buying the phone outright. If you don’t have the cash to hand, but really need a phone (you should be asking yourself what you can afford in this situation) then there are better ways to take out this debt, like a 0% spending credit card and paying this off during the 0% period. Ignore the attractive monthly repayment and ask yourself how much it is really costing to go with a contract.
The other thing with smartphones is that they have gotten to the stage now where the iterative changes between models don’t impart much more functionality or value, certainly not enough to justify the huge price tag associated with the latest phone.
In case you are wondering, I am still rocking an IPhone SE that I bought outright about 4 years ago, and don’t plan to change anytime soon. It’s a solid phone that still keeps up. Keep an eye on the clearance section of the apple store where they have been known to pop up for around £250.
#2: Toilet paper
This one again has a personal aspect. If I need to I fold my toilet paper. But there are a group of complete nutters who scrunch their toilet paper. Apparently around 15% of people do it! It strikes me as messy and rather wasteful but whatever wipes your butt I suppose.
Regardless, if you need to fold your toilet paper to effectively wipe, then you are using twice as much. If you buy single or 2 ply paper that requires you to fold it to actually effectively wipe, then you need a 3 or 4 ply paper.
The difference in price can be as little as 14 to 20p a roll to go from 2 to 3 ply. If you fold your 2 ply paper, you are effectively using at 28p a roll, whereas if you don’t need to fold the 3ply, you are better off at 20p per roll.
Also, if you are wiping enough that you need shea butter or aloe vera in your toilet paper (obviously at an additional cost) then you probably need to look at what your are eating, or perhaps just take a deep breath and wipe more gently.
I agonised for a while over whether to include this (the other contender for the top 5 was cheap bacon), but in the end I settled on including it as this is MY top 5. There is still the chance that is just me rationalising one of my less than frugal vices, but here goes anyway.
I hate cheap shoes. I own cheap shoes, often for a specific purpose like for taking on the beach or gardening, but hate them regardless. It comes down to one thing really, they just don’t last. What is the point buying a pair of trainers for 10 quid from Primark or wherever if they only last for a few months, when a 60 quid pair of trainers could last years if well looked after.
There is also additional value for me in buying shoes, in that I absolutely love the process of buying a new pair, particularly trainers. It is something that can last weeks or even months, looking out for ones I like, weighing up my options, trying them on, thinking about it some more, looking out for offers or cashback. It gives me immense pleasure.
I would love to hear about your favourite (or least favourite as it were) false economies in the comments below.