9 things we routinely overpay for

This post comes from Len Penzo at partner blog Len Penzo dot Com.

If you ask most folks, they hate to overpay for anything. Even so, many people do it all the time and don't even realize it.

After all, frivolous spending is something we're all guilty of at one time or another.

The good news is, getting the urge to splurge under control makes it possible to save significant amounts of cash that can be used to stretch your household budget.

Here are several things people often overpay for:

(Premium) gasoline. Two years ago I conducted an experiment where I ran premium gas in my 1997 Honda Civic for 30 days and actually averaged one mile per gallon less than when I was running lower-octane unleaded. Premium gasoline is intended for use in a very narrow niche of cars. Unless your owner's manual calls for high-octane fuel, it isn't necessary.

(Overly generous) tips. Never mind that tip inflation has caused the average bonus for good service to increase from 10% in the 1950s to, depending on whom you ask, 15% or 20% today. Some people give overly generous gratuities simply to make a good impression on the server. Even worse, they'll often leave average tips for poor service because they don't want their server to dislike them. Both practices make little sense, especially for folks on a limited budget.

(Organic) produce. Many non-organic fruits and vegetables, such as onions, avocados and corn, are grown with significantly lower pesticide loads than others, which is why some organic produce isn't worth the steep price it typically commands. In many cases, you're much better off buying the conventionally grown varieties and then carefully washing them. (Post continues below.)

(Non-generic) medicine. The U.S. Food and Drug Administration constantly tests and analyzes generic medicines to ensure their effectiveness, which is why it maintains that generic medicines perform just as well as their brand-name counterparts. Yet many folks insist on paying a lot more for non-generics anyway. Why?

(Bottled) water. Believe it or not, here in Southern California, where water is supposedly in short supply, I still pay a half cent per gallon for the water that comes out of my tap. I suspect tap water is even cheaper in water-rich areas of the country. Despite that incredible bargain, I recently bought 20 gallons of bottled water that was approximately 200 times more expensive. I know. But like I tell my kids, "Do as I say, not as I do."

(Faster) shipping. One of the hallmarks of financially responsible people is patience. Consider the enormous price premiums for expedited shipping. I recently purchased $10 worth of business cards from a company that offered next-day shipping for $54.25 and two-day shipping for $23.65. Meanwhile, the no-frills, standard shipping rate for people who are willing to wait an extra one to three days was only $5.77. Guess which option I selected.

(First-class) airline tickets. Unless you are flying on an extended trip overseas, it's hard for many people to justify the price premium of a first-class airline ticket, which can often cost two or three times the price of an economy-class fare. If the thought of sitting in a coach seat for any length of time is unbearable, consider premium economy class, which can often be had for a premium of $100 or less.

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(Brand-new) automobiles. Almost everybody loves the smell of a new car, but that doesn't change the fact that, financially speaking, you can't beat a used vehicle purchased from a private owner. This is primarily because new cars typically lose up to half their original value over the first three years of ownership.

(Whole) life insurance. Unlike term life insurance, whole life insurance couples the term policy's guaranteed death benefit with an additional investment product. Yes, whole life may sound like a better deal. The trouble is, it's the least cost-effective option because you end up paying for both the insurance and the fees associated with the investment component. In most cases, you're much better off buying term insurance and then investing the realized savings.

Remember, while it's true that many times you get what you pay for, it's also just as true that sometimes you don't. The key to ensuring you always get the most bang for your buck is in recognizing the difference.

More on Len Penzo dot Com and MSN Money:

• 10 characteristics of debt-free people
• 19 things your millionaire neighbor won't tell you
• Why you should (and shouldn't) prepay your mortgage
• Batteries: Name-brand vs. generic
• 20 things you should pay more for
• 14 things you should buy used