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Have you heard the old English proverb, “penny wise and pound foolish”?
It means you’re so careful to watch your pennies that you don’t see how you’re wasting whole dollars (or British pounds as the saying goes).
I had a boss who used to use this expression when we were looking at business expenses. Someone once recommended printing our client presentations in black and white instead of color because the color ink was so expensive, and the boss said, “hold on, let’s not be penny wise and pound foolish.”
He knew that we might save a few pennies on the color, but the lack of polish in our presentation could cost us the client which could cost us thousands of dollars. That’s right, professional presentations used to be printed on paper.
So today we’re going to look at common ways people are penny wise and pound foolish.
9 Ways You Could be Penny Wise and Pound Foolish
How many of these are you guilty of…?
Buying in Bulk
Buying in bulk can be a great way to save some money. You get a nice discount for buying 100 rolls of paper towels instead of just 4. All good!
But buying in bulk becomes a problem when you don’t use everything you bought. Are you really going to eat 24 apples before they go bad? If not, you end up throwing rotting food away, effectively throwing your dollars away as well.
You’d have been better off paying a few more pennies per apple and not wasting a bunch of food.
Always Shopping Sales
Again, sales can be a great way to save money. But if you buy stuff you don’t really need or love, simply because they’re on sale, you’re being pound foolish.
Most of us are guilty of this. You see a dress marked down from $120 to $75. It’s not your favorite dress, but you’re saving $45, right?!
Uh, no actually. That dress is going to sit in the back of your closet for a few years before you give it to charity. You just wasted $75.
Skimping on Insurance
No one likes paying for insurance.
You pay and pay and pay and never see a real benefit. Until you do.
As in, until something super crappy happens and you have to thank your lucky stars you have proper insurance coverage. Say you have to go to the emergency room. That single trip without insurance could cost thousands!
That expense could easily wipe out all the pennies you saved by skimping on insurance.
Eating Cheap Fast Food
You’re at Chick-fil-A. You can get nuggets for $3 or a salad for $7. You know the nuggets aren’t great for you, but you also don’t want to spend more than twice as much for a healthy salad. So you save your pennies and get the nuggets.
That’s fine every once in a while, but if cheap fast food is your go-to because you don’t want to spend the money on healthy options, it could cost you huge dollars in the long run.
A crap diet is linked to all kinds of expensive health issues. You may need pricey medications and/or procedures in the future. Even your health insurance premiums could increase.
So spend the extra pennies to get healthy food now and avoid paying all those pounds later.
Ignoring Maintenance
Almost everything in life requires maintenance. And maintenance can be expensive. But not nearly as expensive as ignoring the maintenance and letting everything fall apart.
| What Needs Maintained | Financial Costs of Maintenance | Financial Costs of Not Maintaining |
| Car | Oil changes, tire rotations, brake pads | Expensive repairs and replacements. Could even cause an accident. |
| House | Having systems inspected routinely | Expensive repairs and replacements. Lower resale value. |
| Health | Healthy food, good tennis shoes | Medications, procedures, higher insurance premiums. |
| Career | Training courses, association dues | You miss out on better-paying career opportunities. |
| Marriage | Regular date nights and romantic getaways | I hear divorces are expensive. |
Accepting Low-Bidders
Ok, so you need a job done…let’s say you need your carburetor fixed. Carburetors are a thing, right?
So you decide to be very grown up about it and get multiple bids from multiple carburetor-fixers. Then you wisely choose the least expensive fixer.
Except, as it turns out, that cheap fixer sucks. You pay him a bunch of money, but he does a crappy job, and after multiple tries with this guy, you end up taking your carburetor to a more expensive fixer, who actually fixes it for you.
I’ll admit, I’ve done this multiple times. With painters, with a roofer, and with a contractor. Never make this mistake with a contractor!
I thought I was saving money by going with the most affordable option, but it cost me more in the long run when some of the work had to be re-done by someone better qualified.
Mismanaging Credit Cards
There are a few legit, money-saving reasons to use credit cards. You might get 15% off your first purchase with a new store card! Or you might get great travel rewards with a Capital One card.
But to make these savings worth it, you have to manage your credit cards correctly.
If you only make the minimum payment on your credit cards, you’ll end up paying way more than you saved with your initial discount or travel rewards.
If you’re going to use credit cards, use these credit card hacks to avoid paying interest.
Doing Your Own Taxes
Like most things on today’s list, doing your own taxes isn’t an inherently bad thing to do. If you have a simple, straight-forward financial situation, you can probably do just fine with Turbo Tax or whatever.
But in my tax experiment, I found that I actually saved money by spending more money on a professional tax accountant.
Maybe run a tax experiment of your own and see if filing your own taxes is really the best route for you. You might be better off spending more pennies on a pro to save pounds on your actual taxes.
Trading Hours for Dollars
Here’s one almost all of us are guilty of!
We work jobs that pay us for our time. This is great for now. I mean, we all need money to live, and this is the quickest way to get these pennies.
But what about long-term? What about when you want to retire? Or what if you are forced into retirement because of mental or physical issues as you get older?
To avoid being pound foolish, find ways to make passive income! Passive income is when you earn money even while you sleep. Sounds too good to be true, I know. But passive income is real, and it’s amazing. The downside to it (proving that it’s not too good to be true) is that you need to invest some time and/or money upfront to start your passive income stream.
But once you get it working, you’ll be able to do what you want with your time while still earning money!
Check out some of these 10 brilliant passive income streams and get on your way to earning your passive income pounds!
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Did we miss something? Do you know of other ways we’re often penny wise and pound foolish? Let us know in the comments!
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