When you have no money you can only afford the cheapest of everything. Unfortunately though, cheap often costs more over the long run.

Not until you start building up your cash reserves do more options open up.

When you have no money, for example, you may only be able to afford a $50 pair of shoes for work. These shoes, due to the poorer quality of materials, may need replacing every year. Whereas a $150 pair of shoes may only need replacing every 5 years. The more expensive pair of shoes is often cheaper. The trick is you need to be able to afford it first.

Where else does it pay to have money?

1/. You can start buying in bulk. The per unit cost when you buy in bulk should be much cheaper than not buying in bulk.

2/. Like the shoes, you can buy quality over budget. Quality bed, pillow, washing machine. Basically anything you can think of that will last and doesn’t need replacing every year. Of course, there is a line in the sand where a certain amount of quality will become exorbitant. The point to aim for is where value meets quality. As soon as that crossover happens and quality goes up and value for money goes down, you have paid too much.

3/. When buying a house you can have at least a 20% deposit, meaning you can get better interest rates and eliminate extra bank charges.

4/. Instead of buying eggs, you can own chickens.

5/. Instead of buying fruit and veges, you can start your own trees and garden.

6/. You can maximise employer and government contributions in Kiwisaver.

7/. You can afford to maintain your teeth with annual visits and maintenance, instead of costly works needed every few years.

8/. You can afford adequate insurance, saving money when disaster strikes.

9/. You don’t incur any bank fees.

10/. You can spend your time and focus on productive things, instead of worrying about your next bill payments.

11/. Maybe you buy solar panels for your roof so you can lower your electricity payments.

12/. Making annual payments on bills. Many companies offer discounted rates to those who can pay these annually, instead of installments. One common example is insurance.

13/. You can buy your own weights and exercise equipment, instead of ongoing annual costs for the gym.

This list is by no means exhaustive, but just some off the top of my head.

If you don’t have money in the first place, you have no choice but to buy the cheapest. Although, cheap works for many things, there are also a lot of things where cheap costs far more over the long run.

When you have money you can take advantage of higher up front costs, but lower long term costs.

People with money open up many advantages that people without money don’t have. Don’t let that advantage go to waste.

The information contained on this site is the opinion of the individual author(s) based on their personal opinions, observation, research, and years of experience. The information offered by this website is general education only and is not meant to be taken as individualised financial advice, legal advice, tax advice, or any other kind of advice. You can read more of my disclaimer here