Cutting the waste from a budget is no easy task. No one sets out to waste money, and it often escapes accounting after the fact as well. Here’s a quick guide to spotting the ways your money sneaks away from you and how to hold onto more of it.
If you’re forgetful, you might be wasting money on…
Late Fees. You could pay small late fees for movie rentals and library books, but late fees on credit cards and house payments will mean more than a slap on the wrist. Paying late often will mean not only fines but damage your credit score in the process. If you just can’t remember, write it down on a calendar or set a reminder. Consider coordinating debt payments with your pay period; the simple act of getting your paycheck will remind you to pay your bills and you won’t have time to waste the cash before it goes to more important expenses.
Missed deadlines. Submit expense reports for reimbursement so you’re not stuck with a bill, and if you’re considering returning an item you bought, take it back before your window of opportunity to return it expires.
“Free Trial” offers you didn’t cancel. Free is great, but free trial offers require you to give credit card information and will begin to charge you if you don’t cancel the subscription by the end of the free period. You may have signed up with the best of financial intentions, getting something for free, but set a reminder for yourself so you don’t wind up paying for something you don’t really want.
If you buy what you want when you want it, you might be wasting money on…
Trips to the vending machine. If you’re feeling tired and looking for a midafternoon pick-me-up from the vending machine, you’re spending too much. Markups on vending items are absurdly high because of the convenience. After all, that bag of pretzels only costs a dollar, right? At the grocery store you could buy a bag three times that size, split it into individual serving sizes and save your money. The same rule applies to caffeinated beverages from the machine or convenience stores and your morning joe at the drive-through coffee place you hit up when you need a morning boost. You can pay for convenience or you can do it yourself with a little extra preparation
ATM fees. Why pay for a service you can get free elsewhere? If you pay ATM fees, that’s just what you’re doing. If your bank and its ATMs aren’t located conveniently for you, get cash back when you make a purchase at the grocery store. Better yet, plan regular stops at the bank – weekly or biweekly fits most schedules- and get the cash you need for the week. Estimate conservatively and this strategy can also help you budget.
Impulse purchases. Do you look back on purchases and realize that you didn’t really need or maybe even want what you bought? Consider the 24 hour rule. When you want to buy something, wait a day and reexamine the potential purchase. By eliminating the impulse and the outside influences, you’ll find in many instances that you no longer want the item. You could compare the cost to something else you would like to buy. One latte a week could add up to the cost of a day at the spa over six months. Calculate the time you would spend at work to make enough to pay for an item. Picture a bad day at work and the fact that you could either save your hard-earned money or trade it for this item. Your choice.
If you have a specific need in mind, don’t buy the first product you see. With hundreds of online retailers, product reviews available with a few clicks and discount-finding sites, there’s no reason not to know exactly what you’re buying and how much you should pay for it. Watch for discounts, promotions or coupons, since getting the same item for less is practically free money. And remember, while your budgeting, you should remember to keep making money in different ways. Some great ways to make some money are by making your own crafts to sell on Etsy, or even Ebay.
If you procrastinate, you could be wasting money on…
Overspending on gifts. Shopping for gifts is like shopping for yourself; you’ll save money if you know in advance what you’re going to buy, compare prices across multiple sellers and look for promotions and discounts that will save you money. However, the tendency to procrastinate gift-buying often means going into a store determined to buy something for a gift without having any idea what it will be. This is a setup for failure, as you might not have the time or the product selection available to choose a gift that really fits the recipient well. You may find the perfect gift which is out of your price range and purchase it anyway.
On the side: If you spend a lot on groceries, you could be wasting money… and food. A recent report by the Natural Resources Defense Council (NRDC) found that Americans routinely throw away 40 percent of the food supply, which amounts to $165 billion a year in wasted resources. The challenge is clear; save money by wasting less. Some suggestions for consumers: integrate grocery shopping with meal planning so you buy only what you will use before it expires or spoils. Plan to use ingredients with the shortest shelf life first and do your best to “clean out” the fridge before grocery shopping again so that food doesn’t slip to the back and spoil quietly. You would be happier not having to clean up that mess too…
{ 5 comments… read them below or add one }
Spotting money waste is very important and many a times we tend to neglect small things. These are excellent points you have made here. Thanks for the share.
Abhishek recently posted..Hello world!
Thanks for summing it all up. Sometimes it is hard to spot a scene where we’re wasting money and we only realize that we are losing a lot when we do audit what we have done to our hard-earned money. I believe that if you pay your bills on time, you’ll save a lot because what eats your money is the penalties and interests you acquire if you use credit cards and such.
Polly recently posted..The Short Sale Process
I really hope this is one of those posts that goes viral because it is exactly what everyone needs to read and reread. Let me be clear, this is all nothing new, but putting it all together like this puts a smile on my face.
The most common practice I see from fellow investors within my community is the lack of understanding on money management. More specifically they do not have goals or limits to what they invest of their portfolio in a given stock. This is a huge opportunity to waste money. It easily allows someone to go and chase the newest hottest thing or where the crowd is that day, all in.
Of your list, I have been most victim to fees. I made a note of them many months ago and kept track of what I found. When you add it all up on a monthly basis its actually disgusting to see and very motivating to ditch.
Scott H recently posted..5 Great Books on Getting Started Investing in Bonds
Hey Chris,
A valuable post. Spotting the wastage of money is very crucial and equally cumbersome. You have provided here great points where many of us would be spending more than necessary. I realized that I am spending way too much because of my habit of impulse purchasing. Thanks for this wake up call. It is truly appreciated.
OK – I think you hit all my hot buttons here…it is so easy to save big on these little things. Forgetfulness, immediate gratification, procrastination – all easy habits to break if you put a little thought to it. Don’t let these people have your money for you own sloppy habits – just take care of it. Here are some more:
– If your check engine light is on, you can get that code read for free at AutoZone and other places (or buy a code reader for $15 online), and check the code in Google to understand the problem. Maybe you can’t fix it yourself, but you can go to the shop as an informed consumer
– The yearly furnace/AC checkup – skip it! It’s mostly a filter check and a quick vacuum, and a quick way to dig up some new business
– If it’s half-off, it’s not a deal unless you wanted it in the first place!
Ed Hoffmann recently posted..A Plan to Succeed: Your Financial Aid Calender