surprising ways you’re wasting money (and how you can change them)
Most of us are in the habit of wasting money, without even realizing it. As bad as it sounds, this is actually perfectly normal. We wind up forgetting about certain expenses, or treating them as minimal, and only when they start to add up over time do they really become burdensome. The good news, though, is that it’s not a burden you have to accept. All you need to do is recognize some of the unnecessary expenses you may have, and take steps to remove them from your day-to-day life.
This effort will look different depending on each person’s spending habits. To give you a head start though, we’ll identify a few of the surprising ways in which people tend to waste quite a bit of money — and some strategies for getting out of these habits.
WAYS YOU ARE WASTING MONEY
By now the idea that people are wasting money on subscription services is actually being talked about fairly frequently. But you might still be surprised at how much you can waste this way. A survey last year found that on average, respondents were spending $348 a year on subscriptions they weren’t using — and this was only in the entertainment category (meaning video and music services, mostly). Throw in other subscriptions — to publications, for style or grooming equipment, for meal kits, etc. — and it’s easy to imagine that number approaching $500 or more.
Sales have always been designed to incentivize purchases where people might not otherwise make them. We’ve all been there: You’re browsing through a store, you don’t really need new pants, but you see a pair being offered for a price you just can’t say no to, so you make the purchase. This has always been the case, but today it’s become so easy to spend money this way that it’s more of a potential waste issue. With one-click shopping online and things of that nature, we hardly have to think about buying for-sale items anymore. You may be buying more things you don’t need this way than you realize.
When it comes to food and beverages, the common refrain is that your daily Starbucks coffee or latte is draining your bank account. Really, the idea of coffee as a major source of waste is a myth (unless you’re buying multiple sweetened drinks for $7 a piece every day). It’s an idea based on some assumptions and a few dubious mathematical analyses that took place years ago. Where you might be spending too much on food and drink though is simply by eating out (or doing takeout). This might not necessarily be the case in 2020 given that most of us aren’t exactly going out much. But between drinks, dinner, and tipping and/or delivery fees, eating out can add up very quickly, even if it doesn’t seem like you’re spending too much on any one occasion.
Home Energy & Water Waste
Where home and energy waste are concerned, the costs can almost be invisible. It’s not as if you know day in and day out what you’re spending to use your heat or air conditioning, and you probably think you’re using only the water you need to. Then, when you see the bills — even if they seem high — you probably accept them as necessary expenses. The truth for most of us though is that we could be cutting back on energy and water expenses by making a little bit more of a conservation effort, or by taking advantage of technologies meant to measure precisely these aspects of home ownership.
Neglecting to Sell Things
Finally, you might also be wasting money in another sense just by not selling old things! Most of us have a few things lying around that we could sell: used electronics, old textbooks, out-of-use furniture or appliances, and so on. This doesn’t mean you have a fortune spread out and hidden in drawers and closets, but it does mean you might be able to scrape together a few hundred dollars a year through occasional sales.
WAYS TO FIX IT
The best way to go about solving problems with wasting money is to address your budgeting strategy. First and foremost, if you don’t tend to do much budgeting at all, it’s time to start! This basically means listing your expenses and income so that you can figure out where you might be able to cut costs to improve your financial standing. Beyond this basic organizing, there are also some creative budgeting tactics you can undertake to really get a handle on your spending. Some recommended tactics include trying a spending freeze (a temporary period of not buying yourself anything new), withdrawing and stashing each month’s spending cash so that you can’t go over your limit, or even just keeping a more detailed money journal.
Another interesting and helpful way to go about fixing these issues is to gather together and save the money you stop spending. In other words, let’s say you take a look at all of your subscriptions. Maybe you realize you’re spending $50 a month on all of them combined, and you decide you can cut $20 of that. Instead of simply canceling those subscriptions, try actually setting the $20 aside every month for a while. If you do this for all of your savings, you’ll quickly get a better idea of just how much money you’re protecting, and you may be motivated to try to save even more.
Last but not least, give some real thought to how you form habits. This is basically a scientific process that we can examine and shape with focus and discipline. So, while adopting a given savings strategy can be very helpful, your most effective long-term adjustment might come from more of a psychological shift. We form habits out of a desire to satisfy cravings to earn rewards. Thus, if you figure out what cues your spending cravings, you might be able to slowly adjust how you respond to those cravings. You may even be able to change what qualifies in your mind as a “reward,” such that you begin yearning to save rather than spend. The process will work a little bit differently for each individual, but do give some thought to the mental side of spending and saving habits.
In the end, just about everybody can improve in these areas in one way or another. Even if you aren’t wasting a whole lot of money, you can probably find a few areas in which you could stand to cut back. Once you do so, you’re just a few simple strategies away from meaningful savings.