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You know what it’s like when you’re trying to do smart spending, saving money here and there, but you find that some of your decisions have meant you’ve made false economies?
Maybe you’ve gone for a cheap iron and found that it just didn’t do the job properly. Or you bought a cheap air ticket and then had to spend extra to check your bag in. Or you keep getting your car mended to the point where you’re throwing good money after bad?
Sainsbury’s Bank Credit Cards have researched this phenomenon and found that we’re all guilty of it, but that there are ways we can spend smarter when we give ourselves a few rules. Here’s how!
- How are we making false economies?
- How to make genuine savings
- Make do and mend not always a good idea
- Cheaper ways to buy new
We would all like to think that we’re smart spenders in the UK, but according to research by Sainsbury’s Bank Credit Cards, it’s a bit of a mixed picture.
For a start, 32% of us admit we have bought a lower quality item and then regretted not paying extra for one that would last longer. However, on the plus side, I6% of us are savvy savers and saved for an item over a long period of time in order to benefit from low levels of interest.
There are lots of ways we are losing money when we think we’re being clever!
We all do it so no point beating yourself up about it. However, it’s worth stopping and thinking every now and then about which useful mistakes we can learn from
Here are the top ten ways that Sainsbury’s Bank found we are wasting money when we think we’re being clever:
- People bought a lower quality item and later regretted not paying extra for one that would last longer (32%)
- Despite it being more expensive, we have often paid for insurance in monthly instalments rather than paying in a lump sum (29%)
- We saved for an item over a long period of time even though we got low levels of interest (16%)
- We bought cheap plane seats but then paid more for allocated seating (15%)
- We spent money we later regretted on running an old car, when a new car would have saved more in the long run (14%)
- People didn’t buy enough baggage allowance for their flight and then paid for additional allowance at the airport (11%)
- We tried to do a DIY project but were unsuccessful and had to pay a tradesperson to finish the job (9%)
- We have tried to save money by not having the boiler serviced (8%)
- We have taken out a cheap mobile phone contract, but then regularly had to buy top-up data/extra minutes or texts (8%)
- People have undervalued the worth of an item on an insurance policy to get a cheaper premium, and then were not covered when it came to submitting a claim (7%)
Yes, we all do it. We think we’re being clever by buying cheaper, or doing something ourselves when, actually, paying someone to do it properly or going for a more expensive but better value item or service would have saved us money in the long-run!
Of course, we have LOADS of ways to help you be a savvy spender on MoneyMagpie.com! Here are a few of them to save you money NOW…
big ticket items
Right now, 67% of us are planning to buy a big ticket item soon. This could be a car, a boiler, a new sofa or even a family holiday.
Check out our article on How to Save on Almost Anything (there’s a challenge!) to find out clever ways to spend.
Also, you can download our free eBook on 101 Tips to Save in the Home here. It has all kinds of clever money-saving ideas!
For a start, you can cut down on your heating bills with help from this article on keeping your home warm for cheap. It includes information on how to switch to the cheapest, fixed-price energy deals as well. You can find them here.
Also, we’ve got 50 ways to save in your home here – what more could you want!
Home insurance, car insurance, travel insurance and other insurances are all cheaper if you can manage to pay the premiums annually rather than monthly.
- Car insurance is really competitive and you can definitely get a better rate by switching (try this site to get the best deal). This article also gives you lots of clever ways to bring the price of your car insurance right down.
- Home insurance is surprisingly cheap right now so make sure you don’t pay more than you need to. See here how to switch and save. Also, here are great ways to save on home costs.
There are loads of genuine ways to save on your travel costs. In fact we have a FREE eBook on how to save on holiday. Download it here.
Also, travel insurance is remarkably cheap compared to the amount insurers pay out on medical costs each year. Se how cheap you can get it here.
Also, even if you have medical conditions or you’re over retirement age, there are surprisingly good deals in travel insurance now, as you can see in this article.
clever car spending
Talk about a big-ticket item!
Here are ideas for buying a car at auction. It is possible to get a really good deal there but you need to know what you’re doing. We also have ideas here on how to get the best deal when buying a second hand car.
And don’t forget to get the best rate for your car insurance. Here are tips including the fact that it really isn’t worth lying on the form. If you come to claim on your insurance you could end up getting nothing if they find you haven’t been entirely honest about your situation!
Now, as you know, we are big fans of making do and mending. Recycling things, updating them, mending rather than buying new is often a good way to save money and help the planet! We have all sorts of ideas on how to do this as part of our Clear Your Clutter Campaign here.
However, there are definitely times when mending things over and over can be throwing good money after bad.
Sainsbury’s Bank Credit Cards found that UK adults often pay for costly repairs to fix old or broken items, spending more money in the long run than if they bought an item upfront:
- People fix items on average twice – costing them £119 a time
- Cars and boilers are the most expensive to fix (Cars on average £214 each time and boilers £150 each time)
- 37% of people have regretted fixing item as 44% thought it would be cheaper to fix than buy new
Of course, sometimes it is cheaper to fix them – particularly if they are under warranty – but fixing is often throwing good money after bad.
how to know if you should buy new
- It sounds obvious, but getting the opinion of an independent expert is often the best way to know if you should just chuck in your current model and buy a new one
- Quite often, particularly in the case of cars, you can get some money back from your old model, so not all is lost
- Get more than one opinion. With a boiler, for example, it is often cheaper to buy a new one rather than fix the old one because newer ones are usually more economical to run as well as not needing fixing for a while. But look online first to see what signs mean you need a new one. For example, this article by Which? magazine gives five signs that you need a new boiler.
- Is insurance getting too expensive? Or back-up services like the RAC? As soon as that gets expensive – or they refuse to take you on as a client – you know it’s time to buy a new model!
So you need to buy a big ticket item urgently, but you need to save money. What do you do?
There are a few possibilities:
- Firstly, be very clear that it is a necessity. Something like a boiler or, if you use it for work, a car should be prioritised over a new sofa or dining table. With the latter you could get something second hand off Gumtree.com or even free from Freecycle.org while you save up for a better one.
- if it really is a necessity you have a few options:
- Use a 0% Purchase Credit card. They can be cheaper than taking out a loan. But do remember that with any Purchase Credit Card, you must make sure that you pay it off in the 0% interest free period – the key thing to remember is to make sure you don’t incur any interest. Find out here how to apply for a credit card like this. If your credit score is good enough there are some great deals where you can spread the debt over a few years. A good one to consider is the Sainsbury’s Bank Purchase Credit Card where you can get up to 28 months interest free! Not only that, but you can earn Nectar points from whatever you buy. The more u spend, the more Nectar points you can make. Find out more about this product here.
- Or take out a low interest loan. There are a lot of those around at the moment so shop around to find the best deal for you.
- You could also use ‘rent to buy’ but don’t touch the likes of BrightHouse. The most cost-effective is the charity backed venture Fair For You which has reasonable rates and allows you to overpay or underpay, depending on your circumstances.