There are a lot of ways of saving money. And saving money is almost always a smart move. Almost.
Sometimes, we make financial moves trying to save some money, but we fail to consider the consequences it will have in the future. Here are three ways of saving money that can actually be robbing you of cash.
1- Using a 401(k) to save on interest costs
Many workplaces offer a matching contribution retirement benefit, known as 401(k). And many employers will allow employees to tap their 401(k) account early to cover other expenses, such as student bills, a down payment for a home or to cover medical costs. It works as a regular loan: the employee takes the money and, then, repays with interests him or herself.
But even if it sounds good, this is a bad idea. Why? Because withdrawing money from your retirement account could cost you years of compound interest, which is the most powerful tool you have when it comes to building wealth. Instead, try building an emergency fund.
2- Buying in bulk
Buying in bulk is a great way of saving money —but if you are not careful, it can also be a waste of money! On the one hand, buying fruits and veggies in bulk can really save you some bucks, but what’s the use of doing that if half of it will end up rotting before you manage to use them?
And not only that: on the other hand, bulk deals can tempt you into buying things you don’t really need nor use, so you might end up probably throwing away half of the stuff you bought.
3- Skipping dentist or doctor appointments
Health care is very expensive, even if you have a health insurance. Dental care is expensive too, so it is quite normal to be tempted to put off an appointment in the hopes of saving a little cash, but guess what? This could end up costing you more money.
For example, filling a cavity is relatively inexpensive, but if you don’t do it and the cavity gets worse, you might end up requiring a crown or a root canal that is way more expensive.