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Penny Wise, Pound Foolish

Many posts on this blog, and others talk about reducing your spending. What you rarely hear about is that cutting corners in spending in certain areas can actually end up costing you in the long run. This makes logical sense of course, and there is even a cliche that indicates it: Penny Wise, Pound Foolish.   However, we probably don’t spend enough attention and time in the Personal finance world on this important subject.

Our Recent Smart Expenditure: Creating A Will

A great example for me is getting a will for my family.  For a long time I put off getting my family a will. It costs upwards of $1000 dollars for a lawyer to draft a will. However, the impact of not having one should both me and my spouse unexpectedly pass is that the custody of our two sons and their inheritance would likely be in a state of flux. We know whom we want to care for our children should something happen to us, but without official documentation, our wants may count for naught.

I’ve actually seen this with an elder relative, where they really wanted their estate to go to a specific family member that was not next on the inheritance list. Given his refusal to sign a will, the property ultimately went into probate and was ripped apart by lawsuits between other family members that were next on the list. His specific family member was not even in the discussion and because of his lack of a will the only one that got his property were lawyers. Always get a will!

Other examples of Penny Wise, Pound Foolish

There are many other things you should spend your money on rather than save:

Car Maintenance
If you’re not changing your car’s oil and rotating tires on a periodic basis you’re asking for trouble. You can of course save money by doing it yourself, but you still need to do it.

Home Maintenance and Repairs
Neglecting home maintenance and minor repairs usually results in major repairs down the line. A leaky basement can result in mold issues. Leaky roof can necessitate repairs to the interior of your home. You get the idea, there is a list a mile long of things you need to keep in good shape in your home to avoid costs down the road.

While not strictly financial, a divorce is the single largest destroyer of wealth in this country. If you’re married, make sure to take time out to spend with your spouse, and show them you appreciate them. Be patient with issues. It will save you a lot of problems down the road.

Spending More Time Trying to Get a Deal then the Deal is Worth
For example for all those extreme coupons, and deal searches on the web, is 10 dollars really worth a 20 hour search? I’m especially guilty of this one, it’s an area I’m working on.

Spending Money Trying to Get a Deal that is Worth Less
I remember about 10 years ago they had websites, and probably still do, that tell you the nearest gas station with the lowest price. I use to think it was great to know where that lowest price gas station was and save us about 6 cents a gallon. Then I started to think about it and realized I probably consume a dollar getting to the gas station, even before you factor in my time, so there is no savings. Instead these days I just choose the cheapest gas station on my previously decided route.

Not Having Health Insurance or Going to the Doctor Regularly
Like a car, your health requires maintenance. Waiting too long can make it much more expensive to fix. Unlike a car it could also mean you ultimately are no longer with us. Then your savings is someone elses, so what have you saved?

Buying in Bulk without a Plan for excess
So, from time to time we buy fruits and veggies in bulk. This reduces costs significantly. However every so often we miscalculate and something spoils. In this case we haven’t really saved anything.

Mothers Working if they Make Less then the Cost of Daycare
As noted in my post about my wife being a stay at home mom, Daycare is expensive. For 2 kids, my break even point for her pay was 37K. Her working for anything less then 37K would thus be Penny Wise, Pound Foolish because we’d be paying for her to work.

Buying Something of Lesser Reliability/Quality
If you have a choice of spending 5 dollars on something that lasts 3 months or 10 dollars on something that lasts a year and it’s something you need for the whole time, then the 5 dollar 3 month option is not a deal. Always remember, especially when shopping, to compare goods by their per unit price and consider whether you’re really saving money.

And speaking of pricing, as noted previously in my pricing article, many retailers use sales and discount percentages to get you to buy more then you need. If you buy something you don’t really want or need, then you haven’t really saved anything.

Cash Back
Spending more and buying more to get credit card cash back. Especially if you end up carrying a balance, you’ve essentially eliminated any of the benefits of the cash back savings.

Where do you spend to avoid being Penny Wise, Pound Foolish? I’m sure there are dozens more that I’ve missed.


  1. Leo T. Ly @
    Leo T. Ly @ February 22, 2017

    I spend more on trying to make my house energy and utility efficient. First, I use less resources, which means it’s good for the environment and I save money. Win, win. Other times, I tend to cut back on my bulk buying habits when it comes to food. Sometimes, the amount is just too much and I can’t consume it all so that defeats the purpose to buy in large quantities.

    • February 22, 2017

      Investing in energy efficiency improvements to your house is a great example, especially in recent years with the tax credit. Thanks for the add.

  2. Erik @ The Mastermind Within
    Erik @ The Mastermind Within February 22, 2017

    I’m becoming more aware of buying things which are “on-sale”. Even if you get 50% off, you are still spending money (50% on!).

    Also, I’ve definitely bought in bulk, only to not use or consume some of whatever I bought. It’s tragic. 🙁

    Thanks for the post FTF, really enjoyed it 🙂

    • February 22, 2017

      The bulk thing is a real risk. My wife had us on Amazon subscribe and save for toilet paper last year. Before we got it shutoff they delivered so much toilet paper it’s been over a year since we’ve bought.

  3. Rich @
    Rich @ February 22, 2017

    This is so true. I think it applies to cars, clothes, food, and even laptops. We used to skimp on laptops but replace them every year until we bought a Macbook Air. The Mac lasts 3-4 years and is more fun to use besides. Another example I always think of is air travel, because I know a lot of people who will endure 2 connections and terrible arrival/departure times to save $100. They lose time and sleep by not flying nonstop, and end up spending extra money on bad airport food anyway.

    I think the decision for a parent to stay home vs. daycare is an interesting example. Personally, I calculate this to include career progression / expectation of future earnings (which you noted in your previous post on the topic) as well as benefits. Sometimes a benefit like a retirement plan (with matching, etc) will outweigh salary alone and make it worth it to stay in the workforce.

    Great topic! –R

    • February 22, 2017

      Thanks for sharing the laptop idea. If you buy poor quality, you get poor quality.

  4. Gary @ Super Saving Tips
    Gary @ Super Saving Tips February 22, 2017

    Very good point! I especially like that you included relationships and health. I’ve learned about both of those the hard way. I’m also guilty of spending too much time trying to get a deal, although my time is more plentiful now that I’m retired.

    One more that I’d include is protecting your income with disability insurance. Unless all your income is passive, it’s important to preserve your future earnings against any kind of illness or accident that may prevent you from working.

    • February 22, 2017

      Disability and probably umbrella insurance as well. You shouldn’t skimp on protecting your income sources.

    MUSTARD SEED MONEY February 22, 2017

    Great list!!! I’d also add eating cheap, fast food which may not have the same nutrients as more expensive options. It reminds me of that song by Tim McGraw with the line, $0.99 heart attack. In the long run this can affect our health and definitely not be the “deal” that we thought it was.

    • February 22, 2017

      I remember a decade ago there was a whole thing about some guy who ate nothing but McDonald’s for months. Yuk!

  6. Go Finance Yourself!
    Go Finance Yourself! February 22, 2017

    Nice work getting your will taken care of. I still need to get my done. One of my numerous goals for 2017. Good list. We don’t often think about it but spending now on things like maintenance can save you a lot in the long run. Better to have a little pain now than a lot of pain in the future.

    • February 23, 2017

      Have you decided on do it yourself versus a lawyer? We’ve been working through a lawyer due to fears do it yourself won’t hold up.

  7. Wall Street Physician
    Wall Street Physician February 23, 2017

    Nice article. The old adage, “an ounce of prevention is worth more than a pound of cure” applies here. Eating cheaper, less healthy food could be costly (medically and financially) later.

    • February 23, 2017

      I hadn’t heard that adage before but it certainly holds true in health, insurance, and a few other areas.

  8. Making Your Money Matter
    Making Your Money Matter February 23, 2017

    On a similar note I feel like focusing on monthly payments instead of overall cost goes along with being penny wise and pound foolish. This is a huge thing they try to get you with at car dealerships. They’ll focus on how low they can get your monthly cost by increasing the length of your loan or a similar tactic, but overall you end up paying way more in the end.

    • February 23, 2017

      Ahh the age old monthly payment redirect. One of my first posts was on car purchase negotiation. Anything that obscures the true value or cost of something is bad news when it comes to a purchase.

  9. Mrs. BITA
    Mrs. BITA February 23, 2017

    Solid list. It is important (and not always easy) to remember to value your time when considering a move that will ostensibly save money. Travel hacking is a good example. I could spend many hours searching fro the best possible redemption, or I can spend a reasonable amount of time for a good enough redemption. It is important to consider the value of those extra hours.

    Buying good quality stuff is another important one that you called out. I drop in to /r/BIFL (buy it for life) when I’m considering a purchase to see if dropping a few extra $ will be worth it in the long run.

    • February 23, 2017

      Thanks for the add. I hadn’t heard of /r/BIFL. I’ll have to give it a look.

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