4 Ways You Are Probably Wasting Money

by Miranda Marquit · 9 comments

The problem with wasting money is that it can be difficult to pinpoint exactly how you are wasting money — unless you honestly keep a spending journal so that you can see exactly where you are wasting the most money. As you work on getting into frugal lifestyle mode, it is important to identify your money weaknesses, and learn about the biggest money wasters in your budget. In many cases, your spending habits are holding you back. Here are 4 ways you are probably wasting money:

1. Buying on Impulse

This is probably one of the biggest money wasters. Often because you think you are getting a deal when you are really just spending money. Apryl Duncan writes about advertising on About.com, and she points out that 66% of all purchase decisions are made in the store, and that 53% of those purchases are actually made on impulse. These are things you buy only because you suddenly feel like it (prodded by advertising and product placement in the store), and not because you need or want the items.

The most obvious way to curb this wasteful behavior is to consider your needs and wants, and make a list. And then stick to it. This can be especially important when at the grocery store, where the bill can add up quickly.

2. Bank Fees

Most of a bank’s revenue comes from fees. These fees are charged on loan origination, overdraft and any number of surcharges. If you fall below an account minimum you can be charged a fee. If you spend more than you have in your account, the fee might be as much as $45 per transaction. And, of course, visiting the ATM can result in its own fees. If you visit an ATM not owned by your bank, that could mean double fees, since each bank might charge you.

In order to avoid these fees, make sure you understand the fee policy at your bank. Opt out of overdraft. Keep track of your spending. (The first time your debit card is declined because you opted out of overdraft will serve as a powerful incentive to keep your finances updated.) Do your best to avoid ATMs. You can get cash by going into the bank itself, or by getting cash back when you make purchases at the store with your debit card. Try to find a bank with low fees, and open accounts that don’t require minimums.

3. Inappropriate Insurance Coverage

You may not realize that you are paying for insurance coverage that you don’t need. I knew a woman whose policy had maternity coverage — even though she was in her forties and had had a hysterectomy. You may also have duplicate coverage for rental car usage, or you may be paying some other premium that you don’t need.

Another concern is that you might be under-insured. In these cases, one illness or auto accident or instance of damage to your home, can result in financial difficulty. You might need to go through your coverage and make sure your coverage is adequate. Save up and create a fund that can be used to pay deductibles, and see if you can raise your deductible to get more coverage at a lower price.

4. Credit Card Balance

It seems like a good deal: You buy something on a credit card, and then make small payments each month. Unfortunately, carrying a credit card balance can lead to a huge waste of money — especially if you only pay the minimum each month. Most of your payment is actually going to interest. And that interest does nothing for you, since it is merely lining someone else’s pockets. If you want to keep more of your money for you, it is vital that you pay off your credit cards as fast as you can, and then avoid carrying a balance. Only buy what you already have money for.

Bottom line: You might be surprised at how much money you are wasting when you take a few minutes to sit down and trace your expenditures. Run a financial audit to see where you can trim some of the waste.

Bonus Tip:

Another way to save on your monthly Internet and TV costs is to find a current ATT U-Verse coupon code or at least a promotion to knock down your home service bill.

{ 9 comments… read them below or add one }

JoeTaxpayer April 10, 2010 at 1:01 pm

(Wow you get around!) I am 3 for 4. The first, I may be guilty. For the small stuff, the big stuff I perseverate over for a long time, years even. My home Mac is 7 yrs old. No impulse buy for me there.

But, at grocery stores, I’m curious how we define things. If we throw very little food away, really none at all (The mayo that expired a year ago doesn’t count!) that implies to me that the impulse buys at the front end are not impacting spending. If I come home with 5 fruits/veggies that weren’t ‘on the list’ that’s an impulse buy, right? But it squeezes out the junk food consumption, the chip/crackers can sit there an extra week. Am I missing something? Are people talking about grabbing magazines and expensive gum at checkout?

Financial Samurai April 10, 2010 at 1:17 pm

I spent $80,000 once on an impulse buy. It was a car that I had thought about in the past, but forgot about it. It WAS $150000 until a certain manufacturer got the import rights and I thought it was quite a deal. Live and let learn.

NOw I have my 1/10th rule for car buying now.

Cheers

Miranda April 10, 2010 at 2:27 pm

I have a feeling that most people aren’t impulse buying fruits and veggies! If that’s what you’re impulse buying — and you’re eating them — I say more power to you! But, yeah, most people at the checkout stand are buying magazines, candy and the silly little gadgety things they put up there. Also, many people impulse buy off the endcaps and displays in the middle of the aisles: Things like soda, toys, “bargain” movies and other tempting things. And, yes, I do get around. I’m a professional blogger. It’s what I do 😉

Fumb Ducker July 8, 2010 at 11:59 am

Wow, you’re so right, I discovered I was insuring 2 yachts and a mansion I sold years ago, that’s $8000 a month back in my pocket!

Joe Mash July 13, 2010 at 10:47 am

The best way to beat temptation is to give in to it!! So, with impulse buying, which is hard to control, I seek out something handy, but inexpensive. Thereby satisfying the emotion and NOT going broke by getting emotionally involved with something more expensive. So it cost me a few bucks, but I’m ‘happy’!

David BankruptInNewJersey August 6, 2010 at 1:37 pm

Moving away from either US coast should do the trick

Teeny Peeny August 6, 2010 at 2:32 pm

My Hummer costs me way too much in gas so I just hook it up to a pack mule and it only costs me carrot to get to work.

Trudat August 6, 2010 at 2:38 pm

If you hit Costco at the right time of day you can eat there for free (demo food). I used to tip all of the demonstrators, or sometimes they would try to charge me for the food, but my husband put a stop to that.

Mookie August 17, 2010 at 4:00 pm

Wow, what insight. Now that i started sticking to my shopping list, I will probably save at least $5 per year at the grocery store.

Seriously though, if the biggest place you have to look for ways to save money is the grocery store, you need to go back to college or something because you don’t make enough money!

Why don’t people ever write articles on making more money. There are two ways to deal with shortfalls, spend less or make more….I for one, prefer to make more.

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