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Top Ten Ways We Waste Money and What to Do About It

For most people money is not something we spend a lot of quality time thinking about. Sure we spend lots of time thinking about how we don’t have enough or what we would do if we had more. None of that is quality time. Quality time thinking about money is when we engage in thoughts that lead to actions that improve our financial well being, so that we waste less and save more.

Find out now: How much do I need to save for retirement?

Money can be a source of great internal conflict and frustration because the thing about money is we seldom think we have enough of it and we too often believe the only remedy for that is to get more money which is not usually immediately possible. The solution to this conundrum is to keep more of what we have. The trick is doing so without sacrificing too much and the best way to do that is to stop money waste.

Interest Waste

The Federal Reserve estimates that the average person has about $7,000 in credit card debt. That means if you pay a modest interest rate of 15% and make the minimum payment each month you will be paying $93.75 a month in interest and it will take you 25 years to pay it off.

The Solution: If you can’t pay for it with cash you don’t need it. Make a plan to pay down your outstanding balance as quickly as possible and only use your credit cards if you can pay the bills off at the end of the month.

Bank Fee Waste

ATMs are such a profitable business that even gas stations got into them. Every time you use an ATM that is not part of your bank’s free network it can cost you $2 or more. Account maintenance fees and overdraft charges can add up to hundreds of dollars a year. Check your statements, what was a free checking account when you signed up may now have fees attached.

The Solution: Stop using ATMs that are not in your bank’s network, there is no reason to. Your debit card is as good as cash and it’s accepted just about everywhere. If you’re paying excessive fees, tell your bank you’re taking your money elsewhere and shop for a free checking account.

6 Sneaky Bank Fees and How to Avoid Them

Lottery Waste

This falls under the category of “what are you thinking?” Habitually playing the lottery is a tax on those who don’t understand probability. The chances of hitting it rich on the lottery are worse than getting hit by lightning, twice… in the same day.

The Solution: Stop playing the lottery, unless you have the kind of resources that allow you to light your cigars with twenty dollar bills, put the $500 or more a year the average lottery player spends in a good investment instead. You’ll get rich a lot quicker than if you keep playing the lottery.

Cable TV Waste

The average cost of cable every month is $100-$200 per month, having doubled and in some cases tripled in the past few years. This is a waste when you likely don’t watch more than a handful of the thousands of channels.

The Solution: Cut the cord. Dump cable and keep the cash. More and more cable channels are making their content available online for free or for a minimal price. Services like Hulu and Netflix offer access to much of what’s on tv.

Bottled Water Waste

This can cost $1, $2, $3 a bottle or more for what is usually nothing more than filtered tap water. The average bottled water drinker consumes 167 bottles a year at an average cost of $1.45 each for a total of $242 a year, not to mention the cost to the environment in packaging waste.

The Solution: Buy a couple of refillable bottles and if you’re not happy with your tap water, get a filter and fill your own. The cost savings will more than cover the cost of the filter and the earth will say thank you.

Lunch Waste

Let’s do lunch! The cost of workday lunches both social and solo is staggering. The cost of eating out even twice a week at the low end of $7.50 per meal amounts to more than $750 per year. For some perspective that rubber chicken sandwich and soft drink you have twice a week cost more than a 7 day Caribbean Cruise in a room with a balcony!

The Solution: Pack your own lunch. There are no special skills required, you can make extra portions of dinner to take for lunch the following day or buy sandwich meats (at the deli counter not pre-sliced and packaged) and make sandwiches suitable for Homer Simpson.

Caffeine Waste

Our collective obsession with caffeine is no longer limited to that Heavenly Coffee that is Good to the Last Drop and brewed at home. Our craving for caffeine has grown to include designer beverages ordered in cryptic cadence after tolerating interminable lines. And it doesn’t end with the dark brew.  We’ve developed a penchant for caffeine laced energy drinks to the tune of $1,000 or more a year.

The Solution: If the thought of ripping the monkey from your back is too much to bear consider a travel mug or thermos and packing your personal barista with you wherever you go.

Designer Anything Waste

Our fascination with labels has blinded us to the fact that more often than not the designer _______ was made in the exact same factory, using the same materials, put together by the same worker as the identical looking knock-off. Our fixation with name brands extends beyond clothes and shoes and includes food and household goods.

The Solution: Ditch the brand name and go native. Unless upon careful inspection and evaluation the designer or brand name is clearly better, going with the generic can save you up to 75 percent or more and easily add up to thousands of dollars a year.

Kids’ Parties Waste

Our progeny are pricey to say the least and much of what we spend on our kids is necessary but there have to be limits. Raising children has become a combination of a crazy competition and an arms race. Children’s birthday parties that were once held around the kitchen table with paper hats and cupcakes have morphed into extravaganzas suitable for World Series winners.

The Solution: Stop. That’s right, just stop trying to keep up with the Kardashians. The reality is that your 7 year old is not going to remember their party by the time they are 10 and some pig-tailed princess’ mother is going to outdo you anyway, so why not deescalate now. The several hundred dollars or more a year will do far more for your child’s self-esteem and future prospects in college fund anyway.

The High Cost of Having Kids

Health Waste

The single biggest way to waste money is through poor health. We’re not talking about diseases and illnesses that could not be prevented, we’re talking about the preventable. Poor diet, lack of exercise, smoking and other bad habits and neglectful behaviors lead to increased spending on not only healthcare but lost income.

The Solution: Take better care of yourself. Stop eating lunch out, pack something healthy from home. Cut back on the caffeine and stop stressing over kids parties and having to have the latest designer whatever. Fill a bottle with tap water and walk to the bank and close your overpriced account and then turn off the TV and go to the gym.

4 Health Habits That Can Save You Money

Photo Credit: flickr

Frank Addessi Born and raised in the center of the known universe, Brooklyn NY, and currently hiding out in the bucolic hills of northeast Pennsylvania writing about personal finance. His expertise includes personal loans, credit cards and retirement. It's not easy living the American Dream but someone has to do it!
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