Sometimes being frugal does pay off. But if you’ve ever tried “cutting corners” on anything in life — from work to relationships to your car repairs — you know it’s a gamble that doesn’t always pay off. Instead, “cutting corners” in your finances can lead to higher expenses, lower satisfaction, and a lower likelihood that you’ll actually meet your money goals. So, if you’re on a budget, how do you know when to save a few bucks and when to pay a bit more? 

Instances When It’s Worth Paying a Higher Price

Some items are worth paying a higher price for good quality. For example, investing in new or high-quality auto accessories and services is usually worth it. Buying used tires, skipping routine maintenance, or buying a shady secondhand car (what some call a ‘hooptie’) can be risky. It may save you money in the moment, but consider how long used tires will last compared to a brand new set, or how many miles you can put on that car before it (and you) ends up on the side of the road. Appliances, housing, clothing, and food are all broad examples of when it’s OK to pay a higher price for quality, but think about instances in your life where you’ve tried to save a few bucks and watched that decision backfire on you — we’ve all got those stories.

One factor to consider when choosing to pay a “higher price”? Think about how often you’ll use an item or how much it will improve your life. You spend a third of your day sleeping in bed, for example, so a quality mattress is a good investment. If you work from home on a computer, invest in something reliable that will last.

Another factor to consider is your health. Investing in a gym membership that keeps you active may seem like a splurge to some, but to you it may be what keeps you happy and trim. Instances aren’t limited to physical objects, either. Like your car’s routine maintenance appointments, routine checkups from dentists and doctors can sometimes spot health issues early, saving you money (and maybe even your life) in the long run, even if it costs you a few bucks now.

Decide What’s Worth Investing in for Your Lifestyle

“Higher price” is a subjective phrase. It depends on your budget. What do you consider to be cheap, average price, or expensive? For example, some people think a $100 purse is cheap, while others think it’s insane to pay $100 for athletic shoes. Some people want to spend money on a nicer car because they commute, while others spend money on bikes because they can ride to work. Others want to eat only organic food and are willing to spend more on groceries, while others enjoy shopping the sales and using coupons to determine what they buy.

These cost “assessments” are unique to the individual, and they’re based a lot on what you value. Take your lifestyle and needs into account when you’re deciding to invest in something — and, unless your spending or debt is a real concern — don’t automatically assume you need to cut it out or buy the cheapest option. When you restrict yourself from using money on things you enjoy, you limit your ability to really stay committed to savings and smart money decisions. 

Leave Room in Your Budget for Fun and Experiences

As we’ve mentioned, frugality isn’t limited to physical objects. Getting your finances in order is important, but it’s also important to allow yourself to enjoy life — and to “put your money where your mouth is” when it comes to your values. Scrimping, restricting yourself from going out, or relying only on special deals to pay for entertainment can be exhausting. It can sometimes do more harm than good. 

Again, take your lifestyle into account when you decide what experiences and entertainment to spend on. Do you love seeing movies with your partner? Maybe you can budget for one or two movie nights at the theater per month. Do you love to try new restaurants with your friends? Leave room in your budget so you can treat yourself every so often. And when you acknowledge what you like to spend money on, you can naturally find other ways to save money that will still allow you to enjoy yourself.

Instead of going out to dinner at a new restaurant, for example, go during lunch or happy hour for cheaper meals instead. If taking family vacations is important to you, fly to your destination during the off-season so you can find cheaper flights and lodging. Once you decide what experiences are important to you, you can find smaller ways to save money without cutting out that expense entirely.

Don’t Lose Sight of What’s Important

Some budget gurus suggest that, in order to be financially secure in the future, you need to “live like no one else now so you can live like no one else later.” However, sacrificing the enjoyment of your life now so you’ll be more secure and happier later isn’t necessarily great advice, especially when it comes at the cost of your happiness or ability to stay the course. For one thing, something unexpected can happen at any time: death, divorce, severe illness, and so on. Why not enjoy the present when you can? For another, when we restrict ourselves without just cause, it can lead to resentment or a rebound on your goals. (How many times have you said “I’m going to stop spending money!” only to rebound at Target and spend money you could’ve put to your travel fund?)

“Cutting costs at all costs” may help in the short term if you’ve accumulated a lot of debt, or if you’ve made many poor financial decisions and need to get back on track. But it’s not a blanket statement that applies to everyone. Don’t be afraid to spend money on things and experiences that really matter to you, or to place value over price. When it’s important to you, your health, or your enjoyment of life, it’s worth investing in.