Biggest Money Wasters

The Most Common Ways People Throw Away Money

There’s a saying “little things add up” and it really is true when it comes to saving your money. If you are just starting a savings program and learning to budget your income, it may come as a huge shock the amount of money you literally throw away every month.

This is why it’s so important to write down all your purchases and go over them to see where your money is going. Most people have no idea the actual cost of all those so-called “small” purchases. Reality hits when you see the receipts and add up the totals.

The good news is there are ways to avoid throwing your money away on pointless purchases. By learning to stay clear of these common spending mistakes, you can watch your savings grow and become a savvy consumer.

ATM Fees

Using an ATM at a bank other than your own can cost you dearly. Most banks don’t charge their account holders for ATM usage. But if you go to another bank, you will most likely get hit with a fee from both that bank and your own. With the average fee now being $5, those ATM charges can really add up. If you want to keep a certain amount of cash on hand, use your own bank’s ATM. Also, when you use your debit card for purchases at most businesses, it will ask if you want “cash back”. This is another way to get cash without paying a service fee.

Cigarettes

Other than the obvious health issues, money spent on cigarettes can really drain your budget. Americans spend nearly $80 billion a year to feed their nicotine habit. The average smoker shells out nearly $300 a month on cigarettes. Add to this the increased cost of health insurance (smokers pay more) and it’s easy to see how your budget can suffer.

Gourmet Coffee

Everywhere you go, you see them- people walking around with their Styrofoam cups of fancy coffee. It’s become a status symbol of sorts. You may even be one of them. But you probably don’t realize how much you’re spending on these gourmet brews. A $5 cappuccino may seem innocent enough. But add that up and it’s$25 a week and $1200 a year. It’s safe to say it would be smarter to have that $1200 in a savings account earning interest rather than gulped down every morning in a coffee mug. No one’s saying don’t have your caffeine in the morning. Brew it at home and take it with you. Or find a less expensive place to indulge. Either way, it will add up in savings to you.

Lottery Tickets

It’s amazing the amount of money people spend on lottery tickets. Last year alone Americans spent nearly $70 billion on these games of chance. The most common lottery tickets purchased are the scratch-off variety. People who play these normally spend between $10-$20 per week. That comes out to $520 to $1040 a year spent on a game you have very little chance of cashing in on. You would be better off taking that money and putting it into a savings account. That’s a sure winner.

Brand-Name Groceries

Everyone has their favorite brands. But the truth is, generic and store brands can save you a lot of money on your grocery bill. Other than the packaging, the ingredients and quality of generic products are usually identical to the national brands. But people tend to buy what they are familiar with- perhaps the brand they grew up with or have seen in an advertisement. Generic items cost, on average, 5% to 10% less than name brands. That can add up to significant savings on your food budget.

Unused Gym Memberships

It’s no surprise that the biggest month for people to sign up for memberships is January! One of the most common New Year’s resolutions is to lose weight and shape up. The fitness industry knows this and many times offers so-called “deals” right after the holidays to increase their membership rolls. New clients agree to have the monthly fee automatically withdrawn from their bank accounts and then, in most cases, they infrequently or never make it to the gym. Try walking or running in your neighborhood, use the stairs at work, or work out to a video at home. There are inexpensive ways to incorporate fitness into your daily routine.

Eating Out (This can be a real budget breaker)

In 2010, consumers spent an average of $28.47 on a restaurant meal. Multiply this by the average 82 restaurant visits yearly and you have a whopping $2,341 spent on eating out. More Americans than ever are eating out, not just for one meal a day, but sometimes 2 or 3 meals a day. It’s no accident that more and more fast food restaurants have added a breakfast menu to their offerings. It’s convenient to hurriedly use the drive-through and gobble down your breakfast while driving to work or dropping off the kids.

The more meals you can prepare and eat at home, the more money you will save. With a little planning, you can start enjoying nourishing and less-costly meals at your own dinner table. No tipping required!

Daily Internet Deals

They fill up your inbox. Every day you are bombarded with offers of discounts on everything from dance lessons and spa treatments to vacation packages and restaurant deals. The daily deal industry is expected to grow by nearly 138% in 2011 with estimated revenues of $2.66 billion. While these deals may sound great when you first read them, be cautious when purchasing these vouchers. You pay for them “up front” and many of them have expiration dates. Unbelievably, nearly 20% of these daily deals go unused. That’s almost $532 million that people waste annually on these coupons. There are smarter ways to spend (or save) your money.

Infomercial Impulse Buys

The infomercial industry has revenues of almost $400 billion a year. That translates to a lot of people sitting on their sofas and hastily making purchases over the phone. Even worse, it’s available 24/7. No longer do you have to pace the floor in the middle of the night when you can’t sleep. Now you can buy that upside-down tomato planter or a “sapphire” ring that is an exact replica of Princess Di’s- the list is endless. Don’t waste your money on things that you will never use (which is what happens with a majority of these purchases). Impulse buying can devastate your finances.

Bundled Cable or Phone Services

Don’t always assume that bundled packages are the best deal available. If you’re paying for services which you don’t even use, it’s not much of a bargain for you. Go over your cable and phone bills and see the actual charges. If your phone plan allows you 1500 text messages a month and you’re only using 500, switch to a lower plan. If you’re paying for 5 premium movie channels and barely can find time to watch a movie once a week, consider cancelling the movie package. The important thing is to go over your billing statements and see what your usage is. Don’t waste money on extras you don’t want or need.

By avoiding these common money wasters, you can stay on a smart path to financial security. Pitfalls are everywhere. But learning to think before you purchase and not making rash expenditures can add up to huge savings in the long run.