We all want to save money, and often, that boils down to being frugal with the things we buy. But while it pays to cut corners in certain areas of your life, there are some expenses that are actually worth paying a premium for. Here are a few instances where being cheap might actually cost you in the long run.
1. Health insurance
Health insurance can be a budget-busting expense, but buying a low-cost plan isn't necessarily the ticket to saving money. Quite the contrary: Premiums and deductibles tend to have an inverse relationship so that the less you spend on the former, the more you inevitably wind up spending on the latter. And that, in turn, could end up costing you more money over the course of a given year.
Another thing to keep in mind is that costlier health insurance often translates into better coverage, which can save you money on copays and other out-of-pocket expenses. So before you opt for the plan with the lowest premium, shop around and see what different price points buy you.
2. Home repairs
When you're dealing with a basic home repair, it almost always makes sense to do it yourself rather than pay the big bucks for a contractor. But when it comes to complicated repairs, you're generally better off hiring professionals than saving a few bucks by going the DIY route. That's because the more complex the repair, the more likely you are to botch it and create an even bigger issue in the process.
And then there's your health and safety to consider. If the work in question results in an injury, you could end up on the hook for major medical bills. That's precisely what happened to us a few years back, when my husband took it upon himself to install a garage door opener in an attempt to save $100 by not using a contractor. Long story short, he wound up with a massive head wound and a $200 ER bill -- hardly worth it. The moral of the story is to think long and hard before tackling a home project or repair yourself, because if you don't really know what you're doing, chances are, it'll be a costly mistake.
3. Used cars
Buying a used car over a new one often makes sense, since vehicles lose value the second they're driven out of the lot. But buying the cheapest used car you can find could mean facing a host of costly repairs and poor gas mileage to boot.
For example, say you buy a used car for the affordable price of $5,000, only to get stuck with another $5,000 in repairs your first year in. It can happen, so if you're going to buy used, go with a certified model. These vehicles generally come with warranties that offer a degree of protection from unexpected immediate repairs, and while you'll pay a little more than you would for a non-certified used car, the benefits will often outweigh the costs.
4. Used appliances
Home appliances can be expensive, so when one of yours breaks, it's natural to want to replace it as cost-effectively as possible. But buying used is a move that could come back to bite you. Because most (though not all) big-name retailers don't sell used appliances, buying secondhand usually means going through small shops or private sellers who don't stand behind them. And if those items break the second you bring them home, you're out of luck.
Most home appliances are a long-term investment. You might buy a new washer, for instance, that lasts you a decade or longer. So rather than spend $300 on a used model that might cost you $500 in repairs over your first few years, spring for a new $700 model that comes with a multi-year warranty. Many large retails offer interest-free or low-interest payments plans for major appliances, so even if you can't afford to buy one outright, you'll generally have the option to pay it off over time if your credit is decent.
Tempting as it may be to save money as often as possible, there are certain areas where it pays to spend a bit more for peace of mind. Remember, you can always cut back on leisure or restaurant meals if you're looking to boost your savings, but don't be so quick to skimp on life's major necessities when you have the means of paying for them.
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