7 things you think have been saving you money, but actually aren’t
Saving money feels good and so naturally, we all look for the best deals and promos to save an extra buck. But what if you found out that your saving tactics aren’t actually doing much for your bank account after all?
INSIDER spoke with several financial experts to find out the ways in which you may be investing your money that leave you with little to no savings or worse — that put you in debt.
It seems like a great idea in theory — buying food staples in bulk to save money — but you may want to think twice about doing this, according to Mark Charnet, founder, and CEO of American Prosperity Group.
With food that has an expiration date, you want to be really careful about how much you think you’ll actually use, he explained. If you end up throwing away food that’s gone bad, you’re just wasting your money.
To avoid this, Charnet suggests before you start shopping in large quantities, make sure the items are a necessity or non-perishable so they don’t go bad before you use them.
Credit cards offering 1% to 2% cash back on purchases may seem like a great idea at first glance. But these promotions can cost you more than you think, according to Jeff Proctor, personal finance expert, and writer of DollarSprout.com.
Certain cards have a penalty APR of 29.99% that kicks in as soon as you miss a payment. This high APR can cost you hundreds of dollars in interest payments if you carry a balance, according to J.R. Duren, personal finance reporter at HighYa.com.
“So, if you carried a balance of $4,000 for an entire year at 29.99%, you’d end up paying about $1,200 in interest, which completely wipes out any cash rewards you’d get,” Duren told INSIDER.
These kinds of plans may offer you a sense relief, knowing you won’t have to worry about going over your data limit, but Nate Masterson, finance manager for Maple Holistics, said you may want to check to see how much data, talk, and text you actually use.
The average cell phone user doesn’t typically need “unlimited” so consider checking your total average usage over the past six months to see where you’re at.
Sure, being frugal is good, but choosing price over quality isn’t always the best idea, according to Chelsea Hudson, Personal Finance Expert at TopCashback.com.
“Purchasing low-quality items to save a few bucks doesn’t always save you money. Instead, you’re often left with a product that breaks easily or you’re unsatisfied with and eventually, buy a better version, which means you spend more than you had to,” Hudson said.
It’s a smart idea to read the reviews for those cheaper alternatives to gauge the quality of the product over the high-quality item, Hudson advised.
Subscriptions include streaming services, subscription boxes, gym memberships, and magazine subscriptions. Many of these services start out very convenient but later on, end up breaking the bank, according to Ryan Heider, financial advisor at Cirrus Wealth Management.
In place of cable, some people overcompensate with too many streaming services, according to Charnet, that they only use for one or two shows. Then you have subscription boxes, which can be a fun surprise in the mail every month, but they often include items customers trash or sit on the shelf unused.
This leads to customers being charged indefinitely for some product or service they are never using, according to Heider, which ends up becoming a big waste of money.
This is a marketing strategy many of us are guilty of and we end up buying more than we originally intended just to meet a certain threshold in order to receive free shipping or a higher discount.
“While this might seem like you’re saving money, most consumers waste money by purchasing items they don’t need,” Hudson told INSIDER.
To avoid extra online fees, Hudson suggests selecting the “Pick Up In Store” option, which not only limits you to buy what you need but also keeps you from buying more for the convenience of free delivery.
Who doesn’t love a sale, especially a going-out-of-business sale? Unfortunately, these kinds of sales can be somewhat misleading, according to Hudson, and can cost you more than you bargained for.
“Reality is, most businesses going out of business raise their prices back to regular price and then stamp a 15% to 30% sale tag on each item. Not only will you pay more than a normal sale, but you can’t use any coupons,” she said.
So next time you see a closing out sale, don’t be fooled by the idea that a store going out of business must have unparalleled sales, Hudson told INSIDER, it’s likely not the case.