Wise savings vs. stupid savings.

A few weeks ago I griped about money being a frequent topic of next-to-coffee-machine conversations, while with time I come to think it is quite natural that people share their tricks how to spend less money, after all this is what a rational homo economicus does. But one can be thrifty which is commonly positive as a virtue and one can be a skin-flint, which is perceived as a shortcoming.

In many aspects of life humans can seek way to cut down on their spending, however each cost-cutting must be wise, i.e. not to cause us troubles, or incur additional expenses in the future. People pursue savings on nearly every step, hence below I share what I believe makes sense and what can make us regret.

Property purchase.

Wise savings:

- waiting for some time for an opportunity to arise (does not apply when prices are soaring), instead of buying in haste,

- handling the process without a property agent, whose value added is debatable,

- striking a decent trade-off between expectations towards a dwelling and budget for the purchase.

Stupid savings:

- looking out for a “slightly” worse location, where prices are more acceptable and then bleating about troublesome commuting, lack of infrastructure, etc.,

- finding a property whose location or layout or technical state or other features fall short of our expectations – the upshot is being fucked up every day by the dwelling – nevertheless in the era of expensive flats, limited creditworthiness, some concessions must be made.

Car and its usage

Firstly, think seriously whether you actually really need a car. Below a certain mileage fixed costs are high enough to justify switching to hire or car sharing or taking a taxi.

Secondly, reduce the number of vehicles in your household. I believe in Warsaw with decent public transport, one car is fair enough to be shared between spouses (and if necessary with their adult children).

Wise savings:

- buying a brand-new car (a compact one is fairly enough for 2+2 family) of mass-market brand once in 10-15 years (after that any vehicle will require high maintenance outlays on account of old age) and looking after it properly,

- investing in a garage, which is not just a convenience, but markedly reduces a vehicle’s wear and tear,

- repairing a car with spare parts produced by renowned manufacturers of aftermarket parts.

Stupid savings:

- having the car serviced by non-qualified mechanics and using cheap or second-hand spare parts – poorly looked after car will pay back with poor service,

- neglecting the regular maintenance or shrugging off defects (don’t play with safety, life and health are priceless),

- buying a used car at a bargain price – usually results in loads of money going down the drain for repairs.

Purchases of durable goods

Wise savings:

- think of number of functions of a device you actually need and you would actually make use of. Buy something which will be up to the mark, not above it

Stupid savings:

- buying stuff of poor quality whose reliability could be questionable. Far better to pay more once for a device which should serve you longer. Unfortunately you never know how quickly a defect occurs.

Everyday shopping

Wise savings:

- looking out for bargains,

- keeping up with leaflets of your nearby supermarkets,

- stocking up on goods which can be stored when they are sold up cheaply.

Stupid savings:

- buying food and other stuff of poorer quality at the expense of lower price.

Buying clothes, footwear, etc.

Wise savings:

- looking out for sales, bargains, etc,

- switching towards less known brands, for which you don’t have to pay for a tag (Polish shoes of broadly unknown brands do not get behind all-the-rage brands in terms of style and quality),

Stupid savings:

- buying shoddy things which will wear down quickly (I leave out here the matter of style) – you will pay several times for a few items which would be outlived be one high-quality item.

Travelling and holidaying

Wise savings:

- if I mention once again “looking out for bargains”, the post would get boring,

- go in low season if you can, if you are not constrained by school holidays or course of business within your company, June and September are great months for summer holidays.

Stupid savings:

- skimping on stuff that impinges your comfort – holidays after all are about rest, so standard of your accommodation and its location and other stuff should matter.

Though I am not yet involved in it, conceptually I have begun to advocate the economy of sharing. Economically, it pays off to rent an infrequently used item, instead of buying it.

And for the very ending, think twice whether you actually need what you want to buy. Maybe for some reasons it will not come in useful, maybe you can just borrow it.