The typical consumer unnecessarily wastes a lot of money on many things, dramatically impacting his or her ability to save for long-term financial goals. Take a look at the items on this list and see if you can make some smart cuts in your discretionary spending.
1. Financial Fees
Credit card fees, bank overdrafts, and ATM fees literally suck money out of your account. Credit card late fees can be as much as $39, though the most a card issuer can charge for the first late payment is $27. Overdraft charges run between $15 and $39 per violation. ATM fees can also add up. Banks not in your ATM network charge up to $3.50 per transaction and your bank can add on a similar fee for using a non-network machine. Non-bank ATMs may charge up to $10 per transaction.
Solution: Better time and money management will help you stop wasting money in these areas. If your paycheck cycle doesn't coincide with the due dates of your bills, ask for a bill adjustment. Most credit card companies and some utilities will change the due date for customers with good credit. Use a debit card and write the withdrawal amount in a ledger in your wallet so you can avoid overdraft fees.
2. Snacks and Beverages
A single cup of coffee from Starbucks can cost over $5, while you'll pay between $1 and a little over $3 at McDonald's, so having a daily coffee cup habit can definitely put a big dent in your budget. Vending machine snacks, retail coffee, and nutrition bars aren't cheap either. It's easy to spend up to $7 a day - or more! - on these items.
Solution: Buy in bulk. If you can't do without your morning caffeine fix and your crunchy afternoon snacks, invest in a bag of gourmet coffee and a box of bagged goodies. You can get a pound of Starbucks Pike Place Roast for about $13, and you can make 82 cups of coffee with it. Bagged snack chips are available in packages of 20 and you can get them from Walmart for between $5 and $8. That's much better than paying around $1 per pack from the vending machine.
3. Phone Services
Multiple cell phones, text messaging services, data plans, plus a home phone and home Internet - this kind of connectivity really adds up. In the U.S., people spend an average of $1,000 per year per person on cell service alone, and a chunk of that cost goes to features that go unused. Add on a home phone and Internet access, and the costs climb even higher.
Solution: If everyone in the family has a cell phone, there's no need to pay for a home line too. It's also a good idea to shop around periodically to make sure that you have one of the cheapest cell phone plans that will meet your needs. If you're really not using a cell phone that often, but want peace of mind with children or while traveling, consider opting for a pay-as-you-go plan. If older teens want more apps and features for their phones, let them pay for them with their allowance. When they have to spend their own money on these toys, they'll assign a different value to them.
4. Name Brand Items
Advertising leads consumers to believe that certain items perform better, taste better, or look better than other items. While this may be true for some products, it's not the case for all. Store brand groceries cost an average of 27% less than their name brand counterparts, so this is an area where you can save significant cash.
Solution: Generic and store brand products are often manufactured the same as more recognized items, but you're not paying for the marketing costs. Well-constructed clothing is worth the investment, but you and your family may not notice much of a difference between name brand and store brand frozen vegetables, baby powder, or plastic bags.
5. Pre-Packaged Food
Convenience foods such as boxed meals, chopped fruits and vegetables, and bottled water might appear to save you time, but in the long run, they won't save you money and can have a negative impact on your health. For example, a gallon of pre-made iced tea costs around $3, while you can make your own for around a dime per serving.
Solution: Use whole foods and other products that reduce waste and ultimately cost less. Instead of buying sodium-packed boxed or bagged noodle dishes, buy large quantities of pasta. When tomatoes, onions, and garlic are on sale, puree them together, add some of your favorite spices, and freeze. You'll have homemade pasta sauce in a jiffy. If you must filter water, invest in a water jug with a charcoal filter or attach a filter to your faucet. Use a BPA-free steel water bottle to reduce plastic bottle waste.
6. TV Packages
If you're not a big sports fan or movie nut, chances are you don't need an expensive cable or satellite TV package. The average cable bill rose to over $100 per month in 2016, which adds up to over $1,200 per year.
Solution: Evaluate your viewing habits and decide just how much TV you need. Netflix, Hulu and Amazon Prime offer both old and new programs and movies for a very low cost, and there are a number of additional free and affordable TV apps. Some TV network channels post the previous night's episode on their own website the next day for free and you can always borrow movies for the whole family from the public library.
7. Convenience Store Purchases
One stop for gas often leads to impulse purchases that really add up. The prices on items such as milk, snacks and personal items can be significantly higher in convenience stores than in supermarkets.
Solution: You can afford to make two stops: one for gas and another at the grocery store. You won't spend as much on gas driving from one to the other as you will by paying the markup on items you know are cheaper at the supermarket.
8. Fast Food
It's important to treat yourself and the family to night away from the kitchen, but fast food is not the way to go. Value meals are no value to your health or your wallet. The average fast food meal can cost $7 or more, so if you're spending that daily for lunch, it adds up.
Solution: If you want a night out with the family, look for restaurants that offer great kids' specials and healthy meal alternatives. National chains sometimes have a "kids eat free" promotion on certain nights. Consider using restaurant coupons too. Fast food is okay sometimes as an occasional option, but it should not be a meal choice every day. You can pack healthy, tasty lunches for pennies on the dollar.
9. Clothing and Accessories
Just because an item is on sale doesn't make it a deal, especially if you don't really need it. American women own an average of 30 outfits, which just may be more than most people actually need. Adding the latest trendy items to your wardrobe every year - especially if you purchase items as soon as they arrive in the store when prices are the highest - can add up to a big chunk of your budget.
Solution: Learn how to spot the best deals when shopping for clothes and consider alternatives for freshening your wardrobe. Thrift stores make it easy to pick up a couple of items on the cheap to mix into your collection. A fun alternative would be to organize a clothing swap.
10. New Cars
A new car is shiny, but it loses value as soon as you drive it off the lot. Low interest leases and five-year car loans means someone is making the most of your money, but it's not you.
Solution: You'll get more for your money buying a used vehicle. On average, used car owners spend $100 less a month on their car payment than new car owners, though maintenance costs may be higher. The Money-zine.com calculator lays it out.
Changing Your Spending Habits
Use this information to help you evaluate the things where you are wasting money and see if you can make some positive changes in your spending habits to help you save more effectively.
