Yarn can easily be the most expensive part of knitting. At first glance, cheap yarn is the solution. But cheap yarn has hidden costs.
One of the biggest potential costs is that the final result will be so badly flawed you’ll just end up throwing it away. Knitting is a process and cheap yarns can make that process unpleasant or unnecessarily difficult.
Before you go out and buy the cheapest yarn you can find, you might want to consider these points.
How Much is An Hour of Your Life Worth?
You’re going to be working with your cheap yarn for hours, days, maybe weeks. Does it feel good in your hands or is it scratchy and unpleasant? Working with unpleasant-feeling yarn will quickly take all the fun out of knitting and greatly decrease your chances of finishing your project, unless you knit very, very fast just to get it over with. In either case, not fun or relaxing.
Use the Face Test.
If you’re making a scarf, sweater or other item that’s going to be close to your face, give 
the yarn ball or skein a quick pass over your cheek before you buy it. If you don’t like the way it feels against your cheek in ball form, chances are neither you nor anyone else will want to put your knitted project anywhere near their face, ever. In which case, even though the yarn may have felt ok on your needles, the project is going in the trash can.
Quality Control
Even if they feel ok, cheap yarns can be difficult to work with. One common problem with yarns is splitting. Some yarns split easily & often making it even more likely you’ll end up adding stitches when you shouldn’t. Your finished project will likely have a ragged or fuzzy look. The good news is that in this case, it’s really not you and has little to do with your skill level. Changing to a needle with a blunter, or sharper, taper might help. Figure out what works for you if you’re stuck with a splitty yarn. Also, watch out for knots and weak spots, you have to cut them out and join the yarn properly or it’ll completely mess up your project.
Plan Ahead
Make sure you know what you’re going to do with the yarn. Case in point, I bought loads of a greatly marked down yarn – 99 cents/ball, down from $10/ball. Seems like a great deal, right? It was black and sort of hairy, almost to the point of being a faux fur. On top of that, it’s very elastic. It stretches a LOT. I still haven’t figured out what to do with it. Make leggings for days when my legs aren’t hairy enough?? Maybe a hairy bikini for a Halloween costume as a cavewoman??? They probably would be kind of warm….
Longevity, Durability and Maintenance.
You found a cheap yarn that feels relatively decent, you put hours and hours, maybe hundreds of hours, into knitting your project with it. Now, it’s done, but how strong is the yarn? Will it last as long as it took you to knit up your project? Will it pill easily and require regular shaving to look decent?
Final Thoughts
If knitting becomes an important part of your life, you’ll develop yarn preferences, i.e. natural fibers, plant fibers, etc. You’ll also find ways to get cheaper yarn, if that remains important to you. Buying discontinued yarn from your local yarn store (LYS) can save you a lot of money, but you’ll have less choice about fiber, color, etc.
Online vendors, such as KnitPicks, can also provide good quality yarns at somewhat lower prices, but you’ll need to have the experience to understand what you’re ordering.
But cheap yarn, that’ll cost you hours and hours of your life in frustration instead of the relaxation and joy that knitting with a good yarn can bring. That’s far too expensive.