Most people want to save money but going too far can result in spending more money in the end.
A recent survey conducted by Gocompare revealed that one in ten parents would insure a car in their name in order to reduce insurance premiums for a child.
Called fronting, this practice can be expensive if the insurance company finds out and denies a claim.
This is just one example of how an attempt to save money can go awry.
Staying on the topic of insurance, many people would lie to an insurance company to reduce their premiums. Not only could this result in being underinsured, it could also invalidate the policy. However, underestimating the value of assets when applying for home insurance can have a much higher price.
Even if the underestimate is accidental, it could result in a reduced claim pay-out. In some cases, the insurance company may refuse the claim and instead reimburse premiums already paid.
Beware of False Food Bargains
Many supermarket deals are too difficult to resist, making it easy to purchase something that is not really a bargain. Supermarkets are known to increase prices for a short time and then cut them, making products look like bargains when these are really back to original prices.
To identify inflated prices, use the price tracker feature on the MySupermarket website to identify price fluctuations during the previous year.
When it comes to meals, the common rule is that it is cheaper to prepare them at home than to dine out or buy pre-made meals from a supermarket. When it comes to cakes and some other baked goods, this is not necessarily true. Store-bought cakes are usually less expensive than making cakes from scratch.
New Hobbies Are Not Always Money-Savers
Many UK residents have sold their cars in exchange for less expensive bicycles that are eco-friendly and provide a workout. Though a new bike has no fuel and low maintenance costs, the equipment that goes along with it can be expensive.
If the new hobby is quickly abandoned, the money spent is wasted. Even discounts or vouchers should not persuade us to take up a new hobby we would not have otherwise considered.
One of the worst mistakes made when attempting to save money is overestimating savings. Something that seems like a huge savings on the surface may not be after total costs are computed. Calculate true savings before spending the estimated savings because that expense may be dipping into a rainy-day fund.