Spending to save: When it’s smart to splurge

Sometimes you have to spend more in the short term to save money in the long term.

There’s an old saying: “You have to spend money to make money.” Common wisdom holds that the opposite is true for saving. The less you spend, the more you save. Pretty straightforward, right?

Not necessarily.

Sometimes you have to spend more in the short term to save money in the long run. It can seem counterintuitive, but in certain cases, larger upfront costs can be justified by the savings they generate down the line.

Here are some examples of how you can save by spending:

Buying in bulk

Lots of people buy the smallest package when they’re shopping. At first glance, it seems that buying only the amount you need is the most frugal way to shop. That’s not always the case.

A woman pushes a shopping cart down an aisle of a big box membership warehouse shop.

Buying in bulk can actually be a shopping strategy to save money. Think about it: Packaging costs make up a large part of an item’s price, so a larger item will typically have a smaller cost per unit. This is partially why bulk stores succeed. Customers know they can score a great deal stocking up on several months’ worth of paper towels instead of buying just the roll or two they need today.

Make a list of what you regularly buy, and choose a larger quantity the next time you roam the aisles at the grocery store. Household staples like toilet paper, shampoo and dish soap are great options, as are nonperishable foods like canned vegetables and pasta.

But there’s a flip side to this approach. It’s easy to lose money buying in bulk if you can’t cycle through your perishable items in time. Don’t buy something you won’t need regularly or that will go bad before you can use it all.

People on exercise bikes during a trainer-led spin class.

Investing in your health

Many budgeting experts recommend cutting gym memberships to reduce expenses. That may work for some, but if committing to a gym or workout program motivates you to exercise, it can be a good investment. Exercising now could save you on healthcare costs later.

It’s the same with nutrition. Hitting the drive-through on your way home from work may feel like a great way to save money, but you need a balanced diet to stay healthy—and keep long-term medical costs down.

Investing in your future

Saving for retirement is an example of how putting away money now can lead to larger rewards later. Whether you keep your savings in a Certificate of Deposit (CD), Individual Retirement Account (IRA) or 401(k), paying into your future is an effective way to improve your finances in the long run.

By saving money now, you’ll be able to enjoy the benefits of long-term investing—namely compound interest. That $50 you save every month could yield $120,000 if you invest for 40 years and earn a 7 percent annual return.

Inside of a laundry room, showing the washer and dryer next to each other.

Buying quality over quantity

Cheaper doesn’t always mean less expensive. You may be able to get away with buying a cheaper trash can, but what about your washing machine? How about a car you rely on for your commute to work? Sometimes buying quality, long-lasting products is the simplest way to make sure your big-ticket items don’t become money pits. The same is true for smaller expenses like clothing. A $50 pair of sturdy jeans might last for years, while a $15 pair could wear out before you know it. Take the long view to determine which is the better deal.

It can be hard to dish out money and not see the benefits immediately, but growing your finances is all about patience. You’ll be grateful that you had the discipline and foresight to invest in your future self.

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