Why penny-pinching is not always a good idea

Sometimes buying the cheapest services and items can actually cost you more in the long term, said First National Bank (FNB).
 
"There is a big difference between being financially prudent and trying to save money by taking short cuts and picking the cheapest product or service," said Eunice Sibiya, head of consumer education at FNB.
 
Buying in bulk
 
Buying in bulk may seem like a great idea as goods are usually cheaper in bulk. However, this does not mean that it will necessarily save you money in the long term.
 
"It is easy to get swept away when you see the lower prices of bulk products, but go through a few check lists in your head such as: do you have storage space for it, what is the expiry date and will you end up consuming more just because you now have a product that is easy to access?" said Sibiya.
 
Sibiya also warned consumers against buying luxury consumables in bulk such as chocolates, biscuits or soft drinks, as this will lead to consuming more of these products than per usual. Therefore, only buy product in bulk that you use on a regular basis and check the expiry date.
 
"A low discount on tinned chickpeas may seem great at the time, but unless you know your family eats chickpeas on a regular basis you will soon be stuck with tins of produce that have expired, take up space and ultimately need to be thrown away," said Sibiya.
 
Buying household cleaning products in bulk is one way to save money, as those are items which will be used and won't expire.
 
Insurance
 
"Cutting out vital insurance such as car, household or life policies to try save a buck or two is very risky," warned Sibiya.
 
When cutting back on insurance, Sibiya explained that you must take a hard look at your circumstances. "If you are young and single without a car or home, you may be able to get away with no insurance," said Sibiya.
 
However, if you have responsibilities such as a family, car and home or household goods, it is never worth the risk to skip or skimp on insurance.
 
"Insurance is financial protection against the possibility that an event or situation will leave you or your family financially worse off," said Sibiya.
 
"You are insuring against something that may never happen, but if it does, you could stand to lose something you have worked towards for a long time, such as your home, car or even a holiday that you have spent months saving for if you haven't taken out travel insurance."
 
Using cheap services
 
Sibiya also warns against taking the cheapest option for any services, "From redoing your bathroom to servicing your car," as it is not always the best idea.
 
"Rather see the service as an investment. If you want your geyser to still be running smoothly in a few years' time or your car to get you safely from work to home, it is better to use a reputable service provider that may be a bit more pricey, but can guarantee their work, rather than a fly by night that won't take responsibility for their work," said Sibiya.
 
Taking the cheapest option can end up costing you more money in the long run. "Take stock of your spending habits, and understand whether you are actually saving money when you settle for the cheaper option, or if you are costing yourself more in the future," concluded Sibiya.