by Matt Hermes
on Tuesday, June 23rd, 2020 at 2:06pm.
Smart shoppers know that comparing prices to find the best deal can pay off. However, buying the cheapest option doesn’t always mean you’re actually getting the best deal. In fact, it can make financial sense to spend more on some products and services to save money over the years.
“Sometimes, we might think we’re saving money on cheaper items, when in reality, splurging a little on the more expensive competitor would have saved us more over the long run,” said Matt Dworetsky, president of Dworetsky Financial in Wall Township, New Jersey. Keep reading to find out when splurging on the pricier option can help save you money over time.
Spending more on energy-efficient appliances can help you save money in the long run, said Monica Lam, a financial blogger at LuckyMojito.com and mother of two. In particular, shelling out $50 to $100 more for an Energy Star certified clothes dryer can be a worthwhile splurge. “Our previous dryer was old and took forever to dry our clothes. Buying a more expensive, energy-efficient dryer is worth it. My clothes are done in less than half the time, and I spend less money on our gas bill,” Lam said.
Energy Star certified dryers use 20% less energy — saving more than $200 in energy costs over the lifetime of the dryer, according to Energy Star. For even more savings, a heat pump model uses up to 60% less energy than conventional dryers.
A programmable thermostat can cost twice as much as a nonprogrammable thermostat, but Marc Andre, a personal finance blogger at Vital Dollar, said it can help you save money by easily reducing heating and cooling costs while you’re sleeping or when you’re not home. You can save 10% on your heating and cooling if you have your thermostat programmed to be 7 degrees to 10 degrees higher or lower than your normal setting during the day when you’re not at home or at night, according to the U.S. Department of Energy.
“You can buy a programmable thermostat for about $50,” Andre said. “If you save $10 per month on heating and cooling costs, you can recover that cost in just five months and then save an extra $70 in the first year.”
LED Light Bulbs
Haven’t made the switch to LED light bulbs yet because they cost more than traditional incandescent bulbs? A study by the Consumer Federation of America found you’re not actually saving any money by sticking with the less energy-efficient models. In fact, you’re spending more.
Although LED bulbs cost more upfront, they last longer than incandescents and use less energy. The CFA study found that a household using at least 20 light bulbs could save $1,000 or more over 10 years by switching to LED bulbs.
It can be expensive to install solar panels for your home. On average, a solar panel system costs nearly $13,000 after tax credits that help offset the cost, according to EnergySage, an online solar energy marketplace. However, these systems can pay for themselves over time, said Matt Edstrom, chief marketing officer of GoodLife Home Loans. “Once you start seeing a healthy decrease in your utility bills, you’ll realize how much more efficient these solutions are from both a financial and an eco-friendly viewpoint,” Edstrom said.
The typical American family spends $1,335 on electricity, according to EnergySage. If you generate your own energy with solar panels, your energy savings would offset the cost of the panels within 10 years. From then on, you could bank your savings.
Prepurchase Car Inspection
Buying a used car is a great way to save money. But before you purchase a car that’s been owned before, you should spend a little extra to have it inspected by a trusted mechanic, said Kelan Kline, co-founder of The Savvy Couple blog.
“One of the best things you can splurge your money on that has the potential of saving you thousands of dollars is paying a mechanic to look over a car before purchasing,” Kline said. Expect to pay about $50 for an inspection. “It’s a good practice to have as they can point out any major flaws that might cost you thousands to repair down the road.”
Regular Car Maintenance
Don’t think of taking your car in every few months to get the oil or filters changed as a splurge. Instead, think of it as smart use of your money. “General car maintenance is definitely something to spend on to save you money in the long run,” said Nicole Firebaugh, manager of PMR auto repair shop.
For example, PMR typically charges $25 per oil change, and most cars need an oil change every three months. Without this regular maintenance, though, you could end up needing to replace your engine — which can cost from $3,500 to $7,000, she said. “An oil change every three months would take about 35 years to equal the cost of a cheaper engine replacement,” Firebaugh said. “While over a long period an engine replacement will likely become inevitable, regular maintenance can mean the difference between that engine replacement being at 100,000 miles — when the car is just out of warranty but likely not at an age that it is worth trading in with a blown motor — or 300,000 miles, at which point the vehicle would have served its purpose and would likely be ready to be traded in.”
Don’t skimp out and skip a home inspection to save a little money when buying a home. The average cost to have a professional check the condition of a property is $328, according to HomeAdvisor.
“It’s always best to splurge on a good home inspection to make sure the systems and the components in the house are working properly and in good condition,” Kline said. It can help you avoid sinking money into a house that is in need of costly repairs. Or it can help you negotiate a lower price if you know there are things that need to be fixed or replaced. For example, knowing that the roof is 25 years old and will need to replaced soon is a great bargaining chip to negotiate a lower purchase price, Kline said.
Splurging on a home warranty can save you money when an appliance or system in your home breaks down and needs to be repaired or replaced. A home warranty costs an average of about $25 to $50 a month, but it can save you thousands of dollars, said Brian Greenberg, founder and CEO of True Blue Life Insurance.
For example, when Greenberg’s water heater was leaking, he put in a request to his home warranty company to have it checked out. Greenberg had to pay $65 to the provider who contracted with the warranty company to make the visit but didn’t have to pay any extra to have his water heater replaced. “I’ve saved over $10,000 by having our home warranty over the past seven years,” he said. “The best part is that I don’t have to worry about being overcharged or ripped off.”
Don’t think of life insurance as a splurge. Think of it as a necessity if you have loved ones who rely on you for financial support. More than 40% of U.S. households would feel the financial impact of the loss of a primary breadwinner within six months, according to a study by LIMRA and Life Happens. Without a life insurance benefit payout to help cover costs, they might have to resort to debt and raid their savings to stay afloat.
You don’t actually have to spend a lot to get ample coverage. A 30-year-old man who doesn’t smoke and is in good health could get a 20-year term life insurance policy with a $500,000 benefit for a monthly premium of about $23, according to ValuePenguin. That’s a relatively small price to pay to save your loved ones from feeling a financial pinch when you die.