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5 Myths About Saving Money That Are Hurting Your Finances

By Catherine Brock - Nov 19, 2019 at 10:30AM

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Just when you thought you knew everything about saving money!

Pink Floyd told us there's a dark side of the moon, and according to historical anecdotes, Napoleon was short. These fun "facts" aren't actually true, but believing them shouldn't affect your bank account. Sadly, you can't say the same for myths about saving money.

Penny pinching is big business for American consumers. Research from loyalty marketing company Hawk Incentives indicates that 92% of shoppers are always on the lookout for a deal. Nearly 90% of survey respondents also said price was a top factor that influenced their purchase decisions.

Yes, a discount mindset is good for your finances, right up until you follow shortsighted advice that ultimately costs you more. You can increase your budget-shopping savvy by learning the truth about these common money-saving myths.

Woman comparing coupons in grocery store

Image Source: Getty Images.

1. It's always better to pay in cash

Some financial experts tout the advantages of only shopping with cash. In truth, this strategy may work for some people. You certainly can't spend more than the cash in your wallet if you don't carry credit cards, debit cards, or blank checks.

But you can spend your cash on the wrong things. Paying cash at the gas station, for example, requires you to walk into the market, where fountain sodas and candy bars are calling your name. If you had a credit card, you'd pay at the pump and forgo the temptation.

The cash-only system also takes you out of the running for loyalty rewards. The best credit cards offer 1% to 2% cashback on your purchases, simply by using plastic instead of paying cash. Of course, you'll only benefit when you pay off the balance in full every month.

2. Cheaper is better

In fact, cheaper isn't always better. If you truly want to keep your spending in check, ask yourself a few questions before you jump on that discounted item. First, is it something you were going to buy anyway? Because when you spend $10 on something you don't need, the savings you get is irrelevant. You're still out $10.

Second, do you need to buy something else to use that discounted item? This can happen often with clothing purchases. You pick up a sweater you love at a low price, but then you end up buying a pair of boots to pair with it.

And finally, how long will the discounted item last? A cheap, low-quality item that needs to be replaced quickly or repeatedly is not a great deal. You'll ultimately spend less by purchasing a higher-quality item that lasts.

3. If it's on sale, it's time to buy

Some retailers can -- and do -- increase prices before a sale so they can offer bigger discounts. Other retailers will slash prices routinely every week or weekend. In both scenarios, those sale prices are nothing special; if you miss the sale this weekend, you can likely catch it next weekend.

Don't get lured into a purchase just because something's on sale. You can differentiate a good sale from a bad one by doing your homework. Try using comparison shopping apps like Honey or ShopSavvy so you know baseline prices. That'll help you sniff out the fake deals quickly.

4. Only shop with coupons

According to Juniper Research, coupon redemptions totaled $47 billion in 2017. Unfortunately, there's no data on how much consumers had to spend to get those savings. Grocery store coupons, in particular, can be challenging for money-savers. Sure, they'll offer discounts on brand-name goods, but you might spend even less by purchasing the generic version with no coupon.

Worse yet are the coupons that require you to buy more than one yogurt or box of cereal. If you generally pick up six yogurts at the grocery store, then go ahead and clip that coupon. But the coupon that requires you to buy more than you normally would is far less valuable.

5. A best-price guarantee means you don't have to comparison shop

Online retailers love to promote their best-price guarantees -- and for good reason. They can soften a bargain shopper's paranoia about overpaying.

But a best-price guarantee doesn't mean the retailer is comparison shopping for you. The item you're looking for may indeed have a lower price elsewhere -- but it's up to you to prove it. The guarantee only means the retailer will match a lower price when you can document it. And typically, there are exceptions and limitations involved. Read the fine print so you know what that guarantee actually means.

Don't take discounts at face value

You don't have to go to the dark side of the moon to find a deal. But you do have to look beyond a discount's face value to make sure it's really going to save you money. After all, it would be better to save more in your retirement accounts than save a few cents on an item you wouldn't have purchased if it weren't on sale.

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