4 Money Mistakes that Are “Penny Wise Pound Foolish” (and How to Fix Them)
by Kevin Sun
We all like to save money, but some tricks to save can actually cause costly money mistakes. You might have heard of this as being “penny wise pound foolish,” the origin of which comes from a quote in a 1600s book on melancholy. Having your efforts work against you can certainly feel discouraging! While there’s nothing wrong with counting pennies (or maybe nickels since we’re in Canada), seeing the big picture ensures you actually come out ahead. Being penny wise means watching carefully how much you spend on smaller purchases, but not on larger ones (the pound is British currency). Keep yourself and your wallet on the positive side by avoiding these 5 money mistakes that are penny wise, pound foolish:
1. Driving Too Far for a “Good Deal”
Have you ever driven to a distant gas station to get a lower price at the pump? What about travelling between multiple grocery stores in one shopping trip to get discounts on different items? These are both strategies that can save money. However, to make sure they really do, you must also include the costs of additional travel. Driving one block further to save a few dollars on gas is certainly worth it, but driving 30 minutes further could cost you more getting there and back than any savings you’d get. The same goes for shopping trips, especially for items that you routinely purchase. If after doing the math, you find that going the extra distance is just barely worth the deal, then remember that your time is worth money too.
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2. Wasting What You Buy in Bulk
Buying what you need in bulk is a penny-wise way to save money; even a single person’s budget can take advantage of big package deals. However, the key is buying what you need. Bulk buying becomes a pound-foolish choice when it pressures you into purchasing items you don’t need, which is often what great deals are designed to do. Examples of this are bulk buying more food than you can eat and clothes that you never end up wearing. This not only wastes money, but also creates waste. Avoid both by planning ahead and writing down what you need before you start shopping.
3. Always Choosing the Cheapest Option
Cheap items tend to be cheap for a reason – they might save you a lot of pennies now, but can cost many more dollars (or pounds, in England) down the line. But that doesn’t mean you’ll get the best value out of expensive items either. Rather than judge quality by price, examine the specific quality markers that you care about. For food, that could be taste and nutritional facts. For clothes, it could be the aesthetics, type of fabric, and how it was made. For electronics, it could be the listed technical specifications. Putting in this extra bit of care helps you hit the best value based on your specific needs. You’ll also better appreciate what you buy! Whether cheap, expensive, or somewhere in-between, also make sure the purchase fits your budget.
4. Not Investing in Yourself
Penny wise pound foolish is a synonym for short-sightedness, and the most important thing to not be short-sighted about is yourself. This isn’t just about education. Taking care of your body and mind – such as by planning healthy meals and being careful of burnout culture – is also a smart financial decision. Money invested into your health will pay off by reducing your future healthcare costs. If you’re struggling with debt stress, tackle the cause rather than let the symptoms fester. Taking advantage of rare opportunities for personal growth can cause you to lose out on some income now, but could provide great returns when you realize your potential. Of course, figuring out how best to invest in ourselves can itself be a lifelong problem. Yet understanding that you are your best resource is the first step to solving it. And as your own best resource, it’s worth it to prioritize paying yourself first. Save some money from each pay cheque for your future before you spend the rest on other needs.
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How to Get Help with Avoiding Money Mistakes to Keep Pennies and Pounds Safely Saved
Here’s a bonus fifth money mistake to avoid that’s both penny and pound foolish: not making use of free resources to improve your financial knowledge. This site has plenty of that (free budgeting calculator, anyone?), but if you’re looking for more personalized support, contact a non-profit credit counselling agency in your area. A professional counsellor can help you review your financial story, assess your goals, and make a practical plan to bring the two together. The best part: talking to a non-profit credit counsellor won’t cost a penny!