Penny wise and pound foolish examples are everywhere. The term comes from an old English proverb that is sometimes used in the United States & Canada as well. Penny and pound refer to English money. If you’re penny wise and pound foolish then you make decisions that appear to be financially beneficial, but actually cost you more money in the long run.
If they pay a penie or two pence more for the reddinesse of them .. let them looke to that, a foole and his money is soone parted. – ye olde English proverb
If you’re on a personal finance journey right now then you most likely know all about the ‘big stuff’ – spending less than you earn, investing, avoiding debt, not paying for coffee at Starbucks. 🙂
But after you’ve picked all the “low hanging fruit” from your budget then your next steps are to look for other ways to be efficient in your life. This is where penny wise & pound foolish can come into play, because you might actually think you’re making the right move, when in fact you’re putting roadblocks on your own path. That’s no good.
Penny Wise and Pound Foolish Examples
Here are a few examples of being penny wise and pound foolish from the major areas in our budgets. Take a look and let me know what you think, and if you’ve got any examples of your own then please do leave them in the comments.
- You don’t have renters insurance because you’re being frugal, but your place gets flooded and your furniture, clothing, electronics, etc. are all ruined. Spend the $10-$15 per month on insurance now and save yourself thousands and thousands of dollars later.
- You go with the cheapest contractor you can find to replace the roof on your house and save a few bucks up front, only to find out later that you get what you pay for. Your shingles were installed incorrectly, you’ve got a leak in your roof which is going to cost you far more money than you “saved” up front.
- You’re sick, but avoid going to see your doctor because you don’t want to make that co-payment. Besides, you’ll be fine, right? 36 hours later you’re in the (very expensive) ER after your appendix burst.
- You eat inexpensive, fast food because you think it’s cheaper and more efficient than buying and preparing fresh meals at home. After a while your heath suffers and you end up paying for doctor visits, expensive prescriptions, etc.
- You eat for $5.00 per day by dumpster diving, but end up paying far more in medical bills due to whatever virus you’ve caught by eating out of a dumpster.
When frugality goes too far https://t.co/mTdVP588af
— Ty Roberts (@GetRichQuickish) January 17, 2018
- You skip oil changes and regular maintenance on your car to save a few bucks, but end up paying for costly repairs down the road.
- Driving miles out of your way and waiting in line of idling cars at your local Costco to save $0.10 per gallon on gasoline. The amount you save isn’t worth the time, effort, and wear & tear on your vehicle.
- You’re driving through Ireland with a buddy when suddenly the spare tire you are driving on blows out …. check out the rest of this story in this awesome example from Retire Before Dad
- You don’t save for retirement today because you can’t afford to. But you’re not getting any younger and are unprepared when retirement age rolls finally around, so you have to continue trading your precious time in exchange for a meaningless paycheck.
- Doing your own taxes rather than paying for a professional. You might save a couple hundred bucks up front, but cost yourself thousands down the road in penalties or unclaimed tax benefits.
- You’re dependent upon a paycheck, but don’t give your all at work. Why? Because you’ve become distracted with your ‘side hustle,’ which isn’t earning your much money yet. As a result of your lack of focus you fail to get a promotion, or you get a smaller bonus, or worse – you lose your job.
- You take advantage of your employer (take home office supplies, are too liberal with discounts) and end up getting fired. Nice work saving a few bucks – it just cost you a fortune in lost income.
- You’ve been married for nearly 20 years and fail to continue dating your wife on a regular basis. Why? Because dinner and a movie and a babysitter for 4 kids is bloody expensive? A babysitter isn’t nearly as expensive as a divorce! Yikes. Nothing is more important that your relationships – don’t skimp in this area!*
* While some of you that know me might think I’m describing my own situation here, that’s not the case. My wife and I go on a date every Friday or Saturday. Best money I spend all week, without a doubt!
So that’s what I’ve got off the off the top of my head. Any of these ring true? Have you ever done anything to save (or make) money which ended up costing you more in the long run? Leave a comment below.
A version of this post was first published on 8/26/2016 on Get Rich Quick’ish