The following is a guest post from Emily Guy Birken. She is a staff writer at One Smart Dollar.
As a personal finance blogger and someone who is all about frugal living, I sometimes get the smug feeling that I always know when it’s a good idea to save money on a purchase. Unfortunately, I’m usually wrong whenever I’m feeling that smug, and circumstances will conspire to make sure I’m knocked down a peg or two.
The most recent example was when I decided to buy a jogging stroller. I knew that buying new could be ludicrously expensive, so I took to Craigslist to find a used one. The closest one was in Indianapolis (60 miles away) and cost $75. I spoke to the seller, arranged a pickup time when my family would already be spending the day in Indy, and paid cash for a complete piece of junk that I ended up using fewer than five times.
Other than learning that used jogging strollers, just like used cars, need to go for a test drive before you make a deal, I was reminded of the fact that trying to save money in the wrong ways can often end up costing you more money in the long run. So how do you decide whether to splurge or save on something, when you’re just trying make your purchases fit into your budget?
Luckily, there are several good rules of thumb that can help you decide whether it is the best use of your money:
Check the quality of low-price items
This was one of my biggest mistakes when buying the stroller. I didn’t closely inspect it to determine if it was well made and well cared for (which it wasn’t).
This is a common issue if you shop at inexpensive clothing stores. While it’s possible for someone who knows a little something about clothing to determine whether any particular garment has been built to last or if it will fall apart after the first wash, most of us simply do not have the eye for the necessary level of quality. But anytime you are purchasing a used or low price item, it pays to look it over for signs that it will last. It’s not enough to find a low-cost alternative—you have to also know that you will get value for your money.
“Investment” pieces are worth splurging on
There’s a reason why you don’t go to the cut-rate tailor to get a suit: this is something you plan to own for the long term, and spending more on the top-of-the-line will mean that suit is still wearable for years to come.
Basically, any kind of classic fashion that you can get a great deal of wear from can count as an investment piece: the basic little black dress, classic (and comfortable) shoes, a warm and well-made winter coat. But for the fashions that come and go from season to season (I’m looking at you, wool ponchos), feel free to buy the knock-off. You won’t be wearing it next year.
Splurge when it could negatively affect your health and well-being
I slept for years on a futon, and I had no idea how much my energy levels would increase with the purchase of a good quality mattress. It’s important to spend money on the things that will actually help you feel better and be more productive. Generally, if you use it every day, then it’s worth spending money on quality, whether the product is diapers, an office chair, or a pair of running shoes.
It’s not money-saving if it’s a time-suck
If you could be doing better and more productive things with your time than endlessly clipping and organizing coupons or handling home repairs yourself, then it’s worth spending the extra money.
The Bottom Line
Even the most frugal and savviest shoppers sometimes make mistakes when deciding whether to splurge or save. But if you know enough about what you’re buying to find the hidden gems, if you’re willing to invest in long-term pieces and in your health, and if you keep in mind that DIY isn’t always the best use of your time, you’ll be in a better position to always spend your money wisely.