“Never mistake motion for action.” -Ernest Hemmingway
Do you find yourself always trying to find new ways to save money? If you answered yes then that’s awesome. Unfortunately today I will be discussing financial decisions that are very short sighted and could have more long term problems than benefits.
You may be asking yourself at this point, “how could it be a bad thing if I save money?”
Well let me start off by saying that this article is NOT designed to bash frugality tips, in fact, short sighted financial decisions would not even be considered frugality tips.
Just to clarify the message that I’m trying to get across, allow me to provide you with a few examples of short sighted financial decisions in your 20s: (with thanks to my Twitter followers)
1. Saving money by taking less courses during the semester or by not attending additional workshops/courses that could be extremely beneficial to your career.
2. Cutting up your credit cards into a million tiny pieces just to ensure you won’t use them. Or by canceling your oldest credit card to limit shopping habits as @MoneyMateKate puts it. She also adds that it really hits your credit score. In reality credit cards are not that evil (an article coming to Studenomics this week- stay tuned).
3. Studenomics reader @ssmaia chimes in by saying it is short sighted to buy cheaper but worse quality things that don’t last as long (groceries, clothing, technology, to name a few).
4. An extreme example would be saving money by lower certain types of insurance premiums to save a buck today according to @JeffRoseCFP.
You catch the drift here, short sighted financial decisions are ones that may save you a little bit of money today, but may end up costing you more in the long run.
Now I want to spend some time helping you determine whether a certain financial (or career) decision could be beneficial to your long term growth or extremely short sighted. After answering the following questions you should be able to figure out whether as a college student/twenty something, the money you save is worth it in the long run.
- Am I the only person saving money this way? It’s great to be unique but being the only person you know to not have health insurance isn’t the greatest idea.
- What will I do with the money saved? This is the most important question because if you save money by not taking a course only to go out and get wasted while drinking expensive booze then you may have bigger problems.
- Could this $500 turn into something more? So $500 may be steep for a weekend course but what will the return on your investment be? What if that course teaches something valuable that you could turn around to use to earn an income for many years to come?
- What will I do in case of an emergency? God forbid you ever crash your car but what if you do while having the lowest coverage possible?
- Will I have to make the same purchase 2 months down the road? You can save money by buying the cheapest laptop, but how long will it last?
This article may have been addressed at twenty somethings but I feel everyone can relate to it. Are there certain financial decisions that you feel are extremely short sighted?
{ 2 trackbacks }
{ 2 comments… read them below or add one }
Another one that is important at certain times in your life not entirely related to age: travel time. I haven’t made the mistake in years (the mistake being to choose a less direct flight to save, like, $20)…I often find that the extra money for a direct flight or one with a significantly shorter connection is worth the time and fatigue saved. Example: I paid an extra $40 for a direct flight to Las Vegas because I didn’t want a 90-minute connection at 6am on the way back on a day that I was planning to work.
Amen to that. There are times I’m willing to pay for convenience and a direct flight is one of them. On my recent trip to Europe we had the option of either direct flight or stop over (for a bout $100 cheaper). The direct flight was taken without any consideration. With time zone differences and such long flights the last thing you need is to get even more tired.