No one intentionally opens up their wallet and throws their cash directly down the drain. But some spending habits have the potential to feel like the equivalent.
Here’s the catch: What may be “throwing money down the toilet” for one person might not be for another. Some may allot more flex spending for restaurants or boutique fitness classes, and that’s OK. As long as it’s a healthy spending habit within the predetermined budget, who’s to say it’s a waste?
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But not all of us are budget brainiacs. Here are some common spending habits where many of us waste money without even realizing it.
1. Recurring Subscriptions
Set it and forget it is great when it comes to automating your personal finances, but it’s less than ideal when it comes to subscription services. Seventy percent of American homes have at least one streaming service subscription, and the average U.S. subscriber watches just over three services.
On top of streaming entertainment services, 15% of American consumers subscribe to a box service like Dollar Shave Club, Hello Fresh or FabFitFun. These figures don’t include other monthly recurring payments, such as Patreon subscriptions. The average service costs just over $8 a month, which doesn’t seem like much, but it adds up. The vast majority of people who subscribe to monthly services underestimate the overall costs of them by at least 40%. Some might use up their monthly razors religiously or exclusively watch content on Hulu, but others may not use what they are subscribed to.
Whether a person is ready to ditch some monthly services or not, they can try tracking their monthly recurring spending on a spreadsheet or enrolling in a free service like Trim or Hiatus to catch those monthly bills. From there, subscribers can decide what stays and what goes. What might be worth the cost based on frequency, or what is worth canceling because they didn’t even realize they were signed up.
2. Food Expenses
Buying groceries is an essential part of budgeting, but it’s one everyone should keep an eye on. Purchasing too many groceries or creating food waste can be a big wasted expense. The average American throws away 219 pounds of food a year, and the average U.S. family of four will throw away $1,600 worth of produce alone in a year. Meal planning and buying only what’s needed can help reduce wasted food and money.
But groceries aren’t the only area where money is wasted on food. According to the Bureau of Labor Statistics, the average home in America spends nearly $3,500 annually on food away from home, which includes home delivery.
The average meal out costs $13, which can be as much as a 325% markup of the cost it would take a person to cook the same meal at home. Dining out is great for special occasions, but eating even a few more meals at home a week can lead to some serious long-term savings.
3. Small Impulse Buys
When a purchase is one click away, buying things on impulse becomes almost automatic. It makes ordering new pens or purchasing a latte on the way to work easy, and many of us rationalize the purchase because it’s only a dollar or two.
But a dollar or two adds up faster than most of us think. According to crowdsourced shopping platform Slickdeals, U.S. consumers spend $155.03 on average each month on impulse purchases. Impulse spending ranges dramatically from shopper to shopper, but curbing it can look the same across the board. Try implementing the 30-day rule on most purchases. That means letting something sit in a digital shopping cart for 30 days before determining if it’s worth purchasing. Slowing down the buying cycle can help separate want from need and prevent purchases that are forgotten moments after the transaction.
4. Unreturned Items
Some of us leave cash sitting on the floor of our closets. Ordering clothing and other items online has become fast and seamless, but when something doesn’t meet our expectations, returning it becomes a chore. According to a Cosmopolitan Magazine survey, the average U.S. millennial keeps $120 of online merchandise a year that they’ll never wear. That might not feel like much, but because the clothes go neglected or unworn, the money spent is truly wasted.
Buyers with a closet full of years of unworn clothes can try to recoup some of the money spent with trips to the consignment shop or selling through online marketplaces like Poshmark or Depop.
5. Transportation Costs
Transportation costs are a necessity in budgeting. But many of us don’t account for the true cost of transportation, whether that’s fees associated with parking or the occasional Uber ride.
Owning a car comes with additional expenses, such as gas, insurance and maintenance, but the cost of parking and traffic can be easy to neglect. Parking-related expenses can make up to 45% of a driver’s annual budget, around $3,037 a year. Meter payments, lot fees and parking tickets can add up quickly. With a little research before heading somewhere, drivers can avoid the pricey lots or meters or might even opt to take public transportation if alternatives are too expensive.
People who don’t own a car can still be wasteful with transportation spending. Rideshare apps have made it easier than ever to call a ride on impulse — with the touch of a button, a car will be there in minutes. Since 2015, household annual spending on rideshares, including taxis, has more than tripled.
Rideshares give us the ability to move on demand, but they also can rapidly inflate a transportation budget with a few rides a week. By planning ahead and allowing time for transportation, riders pay a fraction of the cost of a rideshare if they use public transportation instead.
When considering transportation, it’s worth thinking about what rides and trips are absolutely necessary and which can be achieved through public transport.
6. Bank Fees
Many Americans might not even realize how much they’re being charged simply for accessing their money. A 2019 Bankrate study revealed that the average bank overdraft fee is $33.36. That means any time a person overspends on a checking account, they’ll incur the hefty fee. If a person isn’t paying attention, they could overdraw multiple times before realizing what they’ve done.
Some banks will even charge customers just for holding an account with them. The cost of these services fees vary based on interest-bearing and non-interest-bearing accounts but settle out to $15 and $5.61, respectively, each month.
Finally, ATM fees can take a chunk out of a customer’s account in moments. When someone chooses to use an ATM outside of their bank’s network, they’ll pay $4.72, on average, each time they withdraw money.
Each bank fee might feel small when you consider its face value, but these figures add up over time. However, not all accounts are built the same. Everyone budgets a little differently, and what might feel wasteful for some could be intentional budgeting and spending for others. However, sizable banking fees don’t need to be part of anyone’s spending.
Learn more:
This article originally appeared on SoFi.com and was syndicated by MediaFeed.org.
SoFi Money is a cash management account, which is a brokerage product, offered by SoFi Securities LLC, member FINRA / SIPC. Neither SoFi nor its affiliates is a bank. SoFi Money Debit Card issued by The Bancorp Bank. SoFi has partnered with Allpoint to provide consumers with ATM access at any of the 55,000+ ATMs within the Allpoint network. Consumers will not be charged a fee when using an in-network ATM, however, third party fees incurred when using out-of-network ATMs are not subject to reimbursement. SoFi’s ATM policies are subject to change at our discretion at any time.
Third Party Brand Mentions: No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third party trademarks referenced herein are property of their respective owners.
External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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Easy ways to save money
Saving money is important for a whole host of reasons.
For one, It can enable you to afford large expenses (such as a vacation or new flat-screen TV) without running up high-interest credit card debt.
For another, it can provide the peace of mind that comes with knowing you can get through a rough spot without hardship.
Having a financial cushion can also give you options, such as the ability to leave a job you dislike without waiting to get another one. And, it can help you to take the best possible care of yourself and your family.
Even if you feel you don’t earn enough to put anything away, having a well-organized budget can help you find ways to cover necessities, some fun, as well as a little bit of saving.
Saving money doesn’t have to feel hard, either. There are plenty of easy, fairly painless ways to build a simple savings plan–and you don’t have to do them all.
Here are some simple ways to save money each month.
Related: 7 fun ways to save money
Looking at your spending on a weekly basis can feel more manageable than trying to keep track of a month’s worth of spending at a time.
That’s not to say that you shouldn’t budget on a monthly basis, but breaking your timeline into smaller segments can simplify the process.
You can track spending (including every cash/debit/credit card transaction and every bill you pay) by using an app, jotting down every purchase or collecting all of your receipts and writing it all down later.
You might then set a certain day of the week to look over the week’s spending. This can be an enlightening exercise. Because spending can be so frictionless these days, many of us don’t have a real sense of how much we are actually spending on a day-to-day basis.
Just seeing it all laid out in black and white can immediately make you think twice before you buy something nonessential and inspire you to become more intentional with every dollar.
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Once you’ve mastered tracking your cash flow, and have a good idea as to your spending habits, you may want to take it one step further and set up a simple budget.
A budget is nothing more than setting limits for spending in different categories. To get started, you’ll want to list all of your monthly expenses, grouping them into categories, such as groceries, rent, utilities, clothing, etc.
If your goal is to save some money every month, you’re going to want to set a budget for yourself that includes an allocation to saving.
Next, you may want to tally up all of the income you’re taking home each month (after taxes), and see how your monthly spending and monthly income compare.
If spending (including putting some money towards savings) exceeds income, the next step is to look at all your expenses, find places where you can cut back, and then give yourself some spending parameters to stick to each week.
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If you do nothing else to get yourself on the savings path, consider doing this.
Automating savings is a great way to remove a huge barrier to saving — forgetting to put that money aside, then ultimately spending it.
The reality is, we all live busy lives and while we may have every intention of saving money, it often doesn’t happen without a plan.
Automating is an easy way to save money without ever having to think about it.
The idea is to have money moved from a checking account and into a savings account on the same day each month, perhaps soon after your paycheck is deposited.
This way, the money is whisked from the checking account before it can be spent elsewhere.
If you are new to automating or have an irregular income, it’s okay to start with smaller dollar amounts. Likely, you won’t even notice that the money is gone from your account, and you’ll be able to increase that amount over time.
You can set up automatic transfers to your savings, retirement, and other investing accounts.
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An easy way to save money on groceries is to make a meal plan and a shopping list before you go to the store.
Without a list, you may be tempted to buy things that look good but that you don’t need or can’t use. Plus, you may end up having to go back to the store later, where you may be tempted to buy more things.
You don’t have to be a pro at meal-planning. It can be as simple as picking a few recipes that you want to make throughout the week (making large enough portions to provide for leftovers is another way to save).
You can then write a list of the ingredients that you’ll need, making sure to check your cabinets and use what you have first.
You may also want to list exactly what snacks and/or desserts you plan to buy, so you’re not overly tempted once you get to the chips or cookies aisle.
Another way to save money on groceries is to cut back on pricier items, such as meat and alcohol, and to go with store or generic brands whenever possible.
Some of those recurring bills (such as cable, car insurance and cell phone) aren’t carved in stone.
Sometimes you can get a lower rate just by calling up and asking, particularly if the provider is in a competitive market.
Before calling, you may want to do a little research and know exactly what you are getting, how much you are paying, and what the competition is charging. You may also want to get competing quotes.
Even a small reduction in a monthly bill can save significant cash by the end of the year.
If you are experiencing hardship, you may also be able to negotiate down your electric and/or other utility bills by calling and explaining your circumstances. It never hurts to ask.
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This might sound more like spending than saving, but if you’re currently only paying the minimum on your credit cards, a big chunk of your payment is likely going towards interest. Chipping away at the principal can feel like a tall mountain to climb.
If possible, consider putting more than the minimum payment towards your bill each month. The faster those credit cards are paid off, the faster you can reallocate money that was going out the window – and into interest – into savings.
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It can be all-too easy for money to leak out of your account due to sneaky subscriptions.
From unused gym memberships to shopping subscription programs to streaming services and cable television, subscription bills (even small ones) can rack up quickly because they come every single month without fail.
The first step is to cancel any of which no longer serve you. Try to be honest with yourself–are you likely to start going to the gym?
If you’re looking to save money faster, you might consider making a sacrifice on a subscription that you do enjoy. For example, maybe you pay for Netflix, Hulu and Disney+. Is it possible to use just one or two, instead of three?
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If you’re a reader and love books, one fun way to save money is to dig out your library card, or if you don’t have one, stop in to apply for a card.
The library can be a great resource for more than books. For example, you can often access magazines, newspapers, DVDs, music, as well as free passes to local museums.
These days, you can typically get many of the benefits of being a card-holder without ever actually going to a branch. You can often get audio books and e-books, as well as access to online publications, all from your computer or phone. Cost: Zero.
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Buying well-made, durable items instead of cheap, trendy or single-use items may mean spending a little more up front.
But this can be a shrewd money move that can save you a bundle over the long run because you won’t have to repeatedly make the same purchases.
Buying a few classic, well-made pieces of clothing you will wear for a few years, for example, can end up costing less than picking up eight or ten cheaper, trendier items that you’ll end up replacing next year.
It may also pay off to spend a little more for appliances that are known for being reliable and lasting a long time and have great customer reviews, than buying the cheapest option.
Shopping for quality takes some education and practice, but it can be a worthwhile skill that your wallet will appreciate.
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Making impulse purchases can wreck a budget. That’s why if you’re tempted to buy an expensive item that is more of a “want” than a “need,” you may want to give yourself some breathing room, and allow the initial rush to wear off.
For example, you might tell yourself that you’ll wait 30 days and if, after the waiting period is over, you still want the item, you can get it then.
During that time you may lose interest in the item. If, however, you still want it in a month, that’s a good sign that this purchase will add substantial value to your life, and isn’t just a fleeting desire. If you can make room for purchase in your budget, then go for it.
This helps you make spending decisions from a slower, more thoughtful place, and can be a huge help in learning to budget and save money.
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Even if you’re only putting a small amount of money into savings each month, over time, that account will grow.
One way to help it grow faster is to park the money in a place where you won’t accidentally spend it, and where it can earn more interest than a typical savings account.
You might consider opening up a high interest savings account, money market account, online savings account, or a cash management account.
You may find that separating your savings, and watching it grow, keeps you motivated to save.
In some cases, you may be able to create “buckets” within your account, and even give them fun names, such as “Sushi Tour in Japan” or “My Dream House” that can help keep you motivated.
Suwanmanee99 / istockphoto
Saving may not seem nearly as fun as spending, but it can give you the things you ultimately want, whether that’s financial security, a downpayment on a new home, or a comfortable retirement.
And, there are plenty of ways to save money that don’t require sacrifice. Sometimes, all it takes to get going is to become aware of your finances and spending habits.
You can then use a mix of short-term strategies (like spending less every time you go to the supermarket) and long-term moves (like paying down debt and buying higher quality goods).
Learn More:
This article
originally appeared on SoFi.comand was
syndicated by MediaFeed.org.
SoFi Money
SoFi Money is a cash management account, which is a brokerage product, offered by SoFi Securities LLC, member FINRA / SIPC . Neither SoFi nor its affiliates is a bank. SoFi has partnered with Allpoint to provide consumers with ATM access at any of the 55,000+ ATMs within the Allpoint network. Consumers will not be charged a fee when using an in-network ATM, however, third party fees incurred when using out-of-network ATMs are not subject to reimbursement. SoFi’s ATM policies are subject to change at our discretion at any time.
Third Party Brand Mentions: No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third party trademarks referenced herein are property of their respective owners.
External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
DepositPhotos.com
Featured Image Credit: JJPaden / iStock.
