You don’t always want to save as much as you possibly can on everything. I can think of at least a few examples where spending the least amount possible is not always a great idea.
1. Education. I am a huge proponent of public education for two reasons: 1, the involvement with your community, both for parent and child, is going to happen somewhere – there is no sense in insulating yourselves from it; 2, you’ve already paid for it (through taxes). That having been said, education – particularly college, but also secondary and elementary – is not a good candidate for finding the cheapest option simply because it’s cheapest. That might seem to contradict some of my earlier pieces. But I don’t think it really does – I simply think that far too many people choose the most expensive college just because it’s the most expensive, and that’s wrong, too. At every level you need to find options that are good for you and that really address your goals.
2. Health care. This one is tough. Of course you don’t want to overspend, but I can tell you that when you are seriously ill, most – not all, most – thoughts about money go right out the window. Of course in the case of lingering illnesses, you still have to worry about the person’s family’s future – will the cost of health care be too much to allow them to keep a house, for example? And it’s a sad state in this country that we have to worry about the cost of wellcare. But in general, when you are really sick or injured, you don’t stop the hospital from doing procedure X because it costs too much. The hospital or insurance company may stop it, though.
3. Cars and related expenses. When you read people suggesting ways to save money on cars, I always think “this is a metal box that you get in and drive around in at 60 miles per hour – do you really want the cheapest car you can get?” I want the safest car, with reasonable mileage that keeps it from being an outright assault on the environment. I’ll pay a bit extra for the good tires, even though I could get reconditioned ones cheaper. I drive a Prius, so I’ve placed a premium on mileage. That’s a bet that may or may not pay off.
4. Insurance. If you live in a flood zone, you can save some money by skimping on the flood insurance. When the flood comes, though, if your insurance isn’t enough to rebuild your place or buy a new one, why did you bother? What was the point of saving that money if you can’t use the insurance when you need it? Make sure you’re insured against financial catastrophe. Life insurance is important. Having a $100 deductible on your auto isn’t.
5. Babyproofing equipment. I think the choice here is clear. If you want to skimp on gates at the top of the stairs for your child, then I don’t think you have your priorities straight.
6. Food. This one may be a little more contentious, but I think trying to save money on certain types of food is ridiculous. If you eat meat, try this experiment. Go buy some heavily processed, dyed, factory-farm raised chicken, and buy some organic free range chicken. Prepare them both the same way, but don’t overdo the breading, herbs, spices, whatever – keep it simple. Try both of them. Tell me which one was a better use of money. If you aren’t a meat eater, try buying organic, locally produced tomatos and then buy a Mexican imported tomato from the supermarket. In both cases, the more expensive option is likely to taste far better, therefore it satisfies you better meaning you’ll eat less, enjoy it more and be less tempted to let it sit in the fridge until it goes bad. It’s probably healthier, too, but I won’t even use that argument.
7. This one is the tough one – making money. If you are starting a business or investing, you don’t necessarily want the cheapest possible option. Undeveloped property 80 feet from the road with no plumbing or electricity in Montana might be cheap, but that doesn’t mean it’s a good investment. If you are starting up a restaurant, you don’t want to serve the cheapest possible booze.
I guess the purpose of these examples is to show that sometimes the mania for frugality and savings isn’t always the best idea. Saving money can’t always be solely about retiring or financial freedom. Between now and then there is a life to be lived, and lived safely and comfortably.