Last week, we talked about some “spending myths” that are common – spending 2 to 3 months’ salary on an engagement ring, buying a home is always better than renting, etc. If you missed last week’s blog and want to check it out, click HERE!

This week, we’re going to flip the coin and talk about some common “savings myths” that many people take as gospel truth. These aren’t always myths – in some cases, they work out wonderfully. However, many times, people mistakenly apply them and think they are saving money when it is really costing them more in the long run. Let’s talk about some of the most common ones.

It’s Too Late to Start Saving

It’s NEVER too late for you to start saving! When it comes to retirement, obviously starting earlier is Hourglasspreferred since compounding has more time to work its magic. However, if you missed getting that jump start in your younger years, just start wherever you are right now! Save as much as you can and       the money will still have some time to grow.

There is no written rule that states that you HAVE to retire at a certain age. Sure, in your “golden years” you may want a change of pace and not work the daily 9 to 5 grind, but as long as you’re in good health and still can, why not find a fulfilling part-time job that will yield some extra cash as well as provide a sense of pride and fulfillment. If you got a later start saving for retirement, this may be the perfect option for you to save just a little bit more. Plus, after age 50, the IRS allows you to make what’s referred to as “catch-up” contributions. This means that you’re able to stash away a little more towards your retirement AND get a tax break while you do it!

                                                                              Buy the Cheaper Item

Sale SignDoes the phrase “you get what you pay for” always ring true? Well, sometimes, but sometimes not. There are times when buying the cheaper generic brand instead of the more expensive name brand counterpart makes better financial sense. Some occasions that come to mind include medications in which the generic is just as good as the name brand or food products in which the generic brand tastes the same as the more expensive name brand product.

However, in certain products where quality is greatly different, it may make better financial sense to just bite the bullet and buy the more expensive item to begin with. Take this example. You are in the market to buy a new washer and dryer. You weigh the pros and cons of buying a used unit versus a new one and decide to save a couple bucks by buying a used unit. If that used unit is in excellent working condition, you probably made a sensible decision. However, if you are constantly replacing parts and having the repair man visit you on a weekly basis, that “savings” is out the window. You’ll eventually spend the money to buy another unit (likely a new one) and end up even further behind thanks to all of the repair bills you racked up with the used unit.

Of course, the washer is just an example of a cheaper purchase versus a more expensive one. Each situation and product is different. Before making a purchase (especially a large one), do your research to determine the best brand-quality-price value and just remember that cheaper isn’t always better!

Free Shipping

With the increase in online shopping (even for everyday items like groceries and household items), manyOnline Shopping consumers fall into this trap. When ordering online, most of the time, there is a threshold dollar amount which will yield free shipping. It’s a great tool to take advantage of if you are already ordering that amount of product. However, if you find yourself making additional purchases you otherwise would not be making just to get to that “free shipping amount”, you aren’t really saving anything. You’re spending more than you had originally planned.

Want to find a way to take advantage of the free shipping offer?  Instead of placing frequent smaller orders that fall below the free shipping threshold, try to instead make larger more infrequent orders to meet the threshold and take advantage of the free shipping offer.

Couponing and Buying in Bulk

CouponsI’m sure all of us have seen or heard of those hardcore couponers who get “paid to shop”. Well, that’s an exaggeration, but their shopping bills are EXTREMELY low and they walk out of the store with carts LOADED with products. Coupons and buying in bulk can definitely yield significant savings, however, buyer beware! If you find yourself clipping coupons and purchasing products you normally would never have purchased just because “it’s a great price”, you’ve fallen into the coupon trap. Make sure when you clip coupons that you’re only grabbing the ones for products that you actually USE.

Same thing applies with buying in bulk from warehouse stores like BJs and Costco – if you normally use the product and will use it before the expiration date, it’s a great idea to buy in bulk and save some cash. However, if you find yourself buying in bulk and half of the product spoils before you get around to using it, you ended up spending more than you normally would have had you just bought the product in a smaller quantity. If you want to buy in bulk but worry about consuming the products before they spoil, consider making bulk purchases for non-perishable items or go in half with another person who will split the products with you. You can both save some money but not have an overabundance of a product that will end up spoiling.

Again, the “myths” mentioned aren’t always such a terrible idea – buying in bulk can be a smart move to save some money if applied correctly. Just make sure when choosing “savings strategies” that you are choosing a strategy specific to your personal financial situation.

If you have questions or want to get started on saving for retirement at any age, give our office a call and schedule your free consultation! One of our financial team members can help you to develop a plan to help you begin to reach your goals no matter what age you are. Call today and schedule your free consultation!

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Ramsey Solutions. “3 Reasons It’s Not Too Late to Save for Retirement.”  Daveramsey.com, Dave Ramsey, 1 Aug. 2017, www.daveramsey.com/blog/3-reasons-its-not-too-late-retirement.

Schmoll, John. “7 Money-Savings Myths That Cost You Money.” U.S. News & World Report, U.S. News & World Report, money.usnews.com/money/the-frugal-shopper/2015/05/18/7-money-saving-myths-that-cost-you-money.