In the vast world of personal finance bloggery (it’s my neologism, so sue me) there’s no shortage of so-called “money hacks.” They’re called “hacks” to appear sophisticated and perhaps radical, even though they often apply to something banal – attempting to save more money, in this case.
But not all money saving tips are equally valuable. In fact, there are many money hacks that don’t save you money at all. There are also many hacks writing about money that really can’t save you, but I won’t get into that here.
Here are some of the 5 worst offenders, money tips that monopolize your precious time in return for little savings.
1. Coupon Clipping, BOGO, Black Friday
When you think of the word frugal, the image of someone carefully cutting coupons might come to mind. Coupons are manipulative, habituating you to specific brands of prepackaged foods and effectively using coupons requires a huge time dedication. Sure, I’ve seen those shows where stay-at-home wives get entire cartloads of groceries for next to nothing. But I’ve also seen the useless stuff they have to stockpile and the illegal neighborhood stores they run to try to offload that crap.
Buy-one-get-one free deals mostly just convince consumers that they need “one” in the first place. Standing in huge lines just because something that you probably don’t need is cheaper, doesn’t save you money, it literally costs you money.
Alternative Money Hack:
Check out black Friday deals online, which often last several days, to maximize value and get things that you were already going to buy at a discount.
2. DIY Stuff
Unless you are an auto mechanic with a car lift, changing your own oil is dirty, time consuming and doesn’t save you money. Seriously, the cost of doing it yourself is pretty much the same as going to the shop. Similarly, brewing your own beer might be fun but if you’re trying to save money it’s not a winner. After buying the chemistry set, practicing a recipe and waiting for weeks to imbibe mediocre beer, it kind of feels like you should’ve just bought a professionally crafted brew.
There are a lot of things that fit into this category. It’s hard to match the quality of professional operations, or their price points. Businesses produce goods in huge quantities to lower costs and an expert craftsman works with a team to complete projects quickly, correctly and safely. Before doing something yourself, consider whether you could be using that time to make money instead.
Alternative Money Hack:
Undertake projects that require the skills you already have and only if you fully understand the underlying costs. I do my own taxes and financial planning but never do any car maintenance or construction jobs around the house.
3. Product Promotion / Direct Sales
Direct sales are a brilliant, if devious, business plan. Large corporations that churn out hundreds a products in specific categories (cleaning, cooking etc.) somehow convince normal people to aggressively sell products to friends and family. Also, for successfully meeting sales goals you are compensated with… more product. My wife gets into these from time to time and I admit that some of the products are pretty cool. In some cases they can save you money – for instance, the reusable Norwex cloths we use have replaced most of our paper towel use.
But even if the products are good there’s no outliving the shame of hosting a sales party for people who used to love and trust you. It’s reminiscent of the “Amway” days when supposed friends would corner you to, “discuss a business opportunity.” Those days are actually still ongoing. I was approached just a few years ago by a guy with a dream, a pitch and hopelessly bad business plan. They must tell people not to mention the name “Amway” anymore because it took a lot of probing to get it out of him.
Alternative Money Hack:
Create highly useful products or, more likely, services and provide them to friends and family free of cost initially. People can donate to your cause if they want to show their support but focus your efforts on perfecting your craft, then roll out your product or service to the general public. Keep all of profits in cash, instead of mostly useless products.
4. Tiny Houses and Cheap Cars
Everyone knows that being a minimalist is ultra trendy and a “tiny house” is often a required accessory. But is living in a tiny house really a valuable money hack? Many sources suggest that it is, there’s an entire Netflix sub-genre devoted to the topic. With the true cost of buying a home the conventional way, it’s not hard to see why. But what they don’t tell you is that very few people can actually stand to inhabit a tiny house long-term. Tiny houses are also difficult to get zoning for anywhere near a city, they’re vulnerable to security threats and extreme weather and almost always lose value in resale (if they can be resold at all).
Also, buying an ancient car may be the cheapest option in the moment but this up-front discount is often offset by their cumulative long-term costs. Besides, modern vehicles are safer to drive, require far less maintenance and cost less to operate. There’s a good reason why that mid-80’s BMW is listed at $700.
Alternative Money Hacks:
The cost of buying a car might be high but instead of buying a really old car, or a brand new one, find 3-5 year old models from brands with a reputation for longevity (Toyota, Honda or Lexus to name a few). When purchasing a home, focus on negotiating the best deal possible, paying down your mortgage at an accelerated rate and converting your ex-homes into rentals. Eventually you will own a home mortgage-free and without having to live in a glorified trailer.
5. Buying in Bulk
Buying in bulk sounds like a winning plan at first glance. We spent years shopping at Costco and buying huge quantities of food at rock-bottom prices. The problem with buying food in bulk, however, is that most of us aren’t feeding ten people at a time. 24 big-ass muffins don’t last longer than a week and that gallon of fig sauce we bought was only used a few times before it found permanent residence in the fridge door.
Alternative Money Hacks:
Create food plans with dual uses for ingredients in mind. If you need heavy cream for instance, find a few recipes that call for it (or put it in your morning coffee *delicious*) because it doesn’t keep for long. I also like to buy the generic or store brand products which are typically comparable in quality and nutritional value and cost less.
Completely agree. I may disagree slightly on cheap cars – buying new or nearly new has a higher cost for each year. Getting something 8 or 10 years old with 100,000 miles still won’t have huge maintenance costs and it’ll be so much less for each year you have it.
Thanks for the comment Alene. You’re so right about slightly older cars that still have a lot of life in them. In fact I drive a 5 year old car and it still seems like its brand new at 60,000 miles! However, I wouldn’t buy a beater car; they are typically more trouble than they are worth.