You want to save money, but there are some things that you simply should not scrimp on. It’s one thing to look for great deals, but it’s another thing entirely to pay so little for some things that you’re setting yourself up for a financial disaster.

Make sure you’re sufficiently covered. Paying less than you should for insurance - for example, homeowners insurance, car insurance, and medical insurance - sets the stage for real problems when the time comes to make a claim. You should never choose the lowest bidder for insurance solely based on the cost. It may seem like a good idea when you’re plotting out your monthly budget, but it certainly won’t seem like the best decision when you find yourself dealing with a less than helpful insurer after a problem occurs.

The only thing worse than having insufficient insurance coverage is having no insurance at all.

Get your repairs done right. When it comes to getting something repaired, whether it’s your home, your car, or a piece of personal property, you’ll want to check with a few different sources to see who can offer you the best deal. The lowest price should not be the end-all deal breaker though, because you want to find someone who will do the job right. If you don’t get it done right the first time then you’ll probably wind up paying for the same repair all over again, but with a different vendor.

Pay a little extra if it means you won’t have to bother with the same repair in the near future.

Look for durability. Buy cheap furniture, and it won’t last long. Buy durable furniture, and it will cost more initially but last longer. The same principal applies to just about anything you buy, such as clothing, appliances, and cars. Look for sales, discounts, and clearances when you go to make a major purchase instead of just looking for the cheapest thing you can find.

Is it better to buy one high-quality, durable sweater that will last for years, or three cheap sweaters that will fall apart after the first few washings? The smart choice is the more expensive sweater.

Frugality is great, but only when it is tempered with the knowledge that cheaper is not always better.

Think about the long-term consequences of the way you spend your money. There is more to saving money than paying the least amount of money possible when you buy something.

While a lack of liquidity in the credit markets are providing a natural break in spending, many Americans are also tightening their belts with the prospects of recession on the horizon.  Consumer spending has slowed considerably over the last few months and it’s having a noticeable effect on the economy.

It is unfortunate that it takes this kind of situation for people to finally start thinking about saving money.  The amount of debt we have in our society is ridiculous.  For many people, their idea of budgeting is the limit on their credit cards.  The government is no better with the national debt at $9 trillion and rising.

It can be difficult to save money in our over commercialized society.  We are being constantly bombarded with marketing spam at every level, when you watch television or surf the web, we even get it from text messages on our cell phones now.

As ridiculous as it sounds, the current economic climate actually seems to encourage more debt.  Rising inflation and low interest rates greatly favors debtors rather than savers.  This can be misleading however, since our economy doesn’t exist in a vacuum.  With the dollar falling to record lows, the relative wealth of our economy compared to the other nations of the world is taking a serious beating.

It is really the savings rate of a society that builds up wealth over time for an economy.  Over the years, our society’s savings rate has dwindled and the accumulation of debt has grown to epic proportions.

As much it would help the economy for us to spend our way out of a recession, is that really the best thing for us as individuals or as a society?  Debt and credit can be powerful tools to help leverage your financial situation, too much of it however can be disastrous.  You need only look to our highly leveraged financial system to see how that is working out now.

This report on MarketWatch has some troubling statistics about Americans and retirement planning.

“roughly half of all working Americans don’t participate in a retirement plan or don’t have an employer-sponsored plan in which to participate.”

“retirees are living on roughly one-third of their preretirement income. And that’s a far cry from the 70% to 80% income replacement experts suggest Americans need to maintain their preretirement standard of living.”

If the only retirement strategy you have at this point is a plan to live off of social security, you and many other Americans are in big trouble.  With the baby boomers expected to bankrupt the social security system sometime in the next 20 years or so, subsequent generations must be especially cognizant of their retirement planning.

Even people who are actively saving for retirement aren’t saving enough.  Healthcare costs are rising so astronomically it will be difficult to maintain a reasonable standard of living as you grow older. 

However, you still have time before the end of the year to contribute the maximum allowed for both your IRA and 401K plans.  For individuals over 50 years the IRS has a provision to allow you to “catch up” on retirement that allows you to contribute an additional amount over the normal allotment for retirement accounts.