Last Updated on November 6, 2014 by Brian Habibi
People always tell you to watch where, how and on what you spend your money. Spend wisely they say. Unfortunately, there are those who take this to such an extreme that it actually ends up being counterproductive. Being frugal is supposed to mean you save more money, but for some, it means delaying spending and setting yourself up for larger expenses down the road.
Hearing a weird noise in your car but think that it is normal and will go away soon? That weird noise could turn out to be a problem that, if you let it linger, could damage other parts of the car and turn a routine AED 100 fix into AED 1,000. The same goes for home repairs, such as a leaky faucet in the bathroom. Letting it go on could very well balloon the problem and lead to a flooded bathroom that now costs AED 3,000 to fix instead of AED 300.
Sacrificing for Quality
Frugal people usually opt for the cheapest option. For example, going cheap on anything with a plug is usually not a good long-term decision. The reason it is cheaper compared to other options is because it is made from lower quality materials that will fail much sooner than other ones (not to mention the cheaper products might not comply with the highest safety standards). To really save money, make sure the product is a combination of both quality and price, not just price.
Huge Savings Account
The general rule of thumb is to keep no more than one year’s worth of living expenses in your savings account. Anything extra should be invested wisely in hopes of giving you a return. Otherwise, the money will just be sitting and accumulating a very minimal interest rate instead of being put to use to help grow your wealth.
Minimum Insurance Coverage
Even if you think that you are the safest driver around, or that your home will never flood or catch fire, being under-insured can be real expensive when things go wrong. A nasty car accident can easily mean tens of thousands of dirhams that you will need to shell out if your car insurance policy does not cover it. It is very possible constantly purchasing the cheapest insurance option will catch up to you in the long run.