8 Ways You Are Wasting Money Every Day (and How to Stop)
May 29, 2018
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Earning money isn’t enough if you want to get ahead and stay ahead. To build wealth, you need to find a way to keep, save, and invest some of your hard-earned cash instead of spending it all on who-knows-what.
Unfortunately, our modern lives are rife with spending traps and consumerist ideas that cause us to part with our hard-earned dollars without even realizing it. And, when you’re not careful, it’s far too easy to work full-time and have nothing to show for it.
8 Money-Wasters You Should Avoid Starting Now
If you have ever sat and wondered where all your money went during a particular pay period or month, you know exactly what we’re talking about. To reach the end of the month (or the year) with extra cash to save and invest, you have to plug the holes in your sinking financial ship — and fast. The best way to do this is to figure out the ways you’re wasting money every day and stop doing it.
Here are eight places to start:
#1: Credit Card Interest
If you’re carrying a balance on a credit card, you are wasting tons of cash every month. Keep in mind that credit card interest adds no value to your life; if anything, paying interest is like setting money on fire.
The best way to avoid interest going forward is to pay down the debt you have and quit charging up more. You can also use a balance transfer card to score 0% APR on your credit card debt for up to 21 months.
#2: Not Shopping Around for Insurance
Rates vary dramatically among insurers for auto insurance, homeowners insurance, and other types of coverage. Plus, insurance companies are notorious for cranking up rates on loyal customers who have stuck with the same policies for years.
Most experts suggest you get a quote for all your insurance policies at least once every two years. If you don’t and your rates keep climbing, you are leaving money on the table.
#3: Too Much Dining Out
It’s easy to forget just how easily dining out can cause your food budget to explode. Normally, it’s $10 on fast food here, $30 for a sit-down meal here, and $100 for a fancy weekend dinner here until, all of a sudden, your dining out budget has taken on a life of its own.
If you are dining out a few times a week, it’s smart to get out your bank and credit card statements to see just how much you’re spending at restaurants. The truth might surprise you, but you’ll only know if you look.
If your restaurant dining is out of control, consider cutting it in half or making the rest of your meals at home.
#4: Only Using Debit Cards
If you’re using debit cards and forgoing rewards credit cards, you are leaving money on the table; provided you could easily pay your balances every month. Keep in mind that many cash-back cards offer 2% back or more, or $2 for every $100 you spend. Many also offer signup bonuses worth a few hundred bucks for those who sign up and meet a minimum spending requirement.
By only using a debit card, you’re missing out on valuable rewards and consumer protections like zero fraud liability.
#5: Banking Fees
Many banks charge monthly maintenance fees, account fees, ATM fees and more. You’re losing money if you’re paying these fees regularly since there are many fee-free checking accounts with broad ATM networks you can access.
The best way out of this mess is to search for a new bank account right away. Some offer no fees, as we mentioned already, and you may even score an account with a high APR.
#6: Buying Prepared Foods
Shopping for food is expensive enough, but you’ll ultimately pay more if you always buy food that is prepared for you. This doesn’t just include rotisserie chickens or frozen lasagna from your grocery deli either. Prepared foods include pre-washed and pre-cut fruits and veggies, salad bars, and pre-boxed ingredient services like Blue Apron and Hello Fresh.
You will pay more if you buy prepared foods over the long haul. By buying ingredients and learning to cook from scratch, you will save money over time.
#7: Buying New Clothes
New clothes have almost no resale value, which is clearly illustrated any time you see someone trying to sell a hardly worn shirt or dress for a few bucks on your neighborhood’s Facebook page. If you buy clothes second-hand, you can avoid the upfront markup and save 50% or more.
While you may not want to peruse garage sales all the time, there are plenty of ways to buy higher end used clothing without leaving your home. Websites like Poshmark.com and ThredUp.com are great resources when it comes to finding brands you like for a fraction of the price, but you may also find nice clothing resale and consignment stores in your area.
#8: Having Bad Credit
Last but not least, don’t forget how poor credit can affect how much you pay for, well, everything. Not only can poor credit mean paying higher interest rates on car loans and personal loans, but it can lead to paying higher rates on auto insurance, too.
Bad credit is a waste, which is why you should take steps to improve your credit right away. You can start by paying all your bills on time and paying down debt to decrease your credit utilization. If you’re trying to build credit from scratch, you can also consider a secured credit card.
While a secured credit card may not be ideal since it requires a cash deposit, your on-time payments will be reported to the three credit reporting agencies. This should ultimately boost your score over time, which can mean you can qualify for a better credit card and save money on interest from that day forward.