Living paycheck to paycheck, paying your bills on time, trying to put some money aside in savings, but still don’t know why you can’t “get ahead”?
Maybe there are a few “habits” you have you’re unaware of that’s costing you money every time?
I’ll point out ten careless spending habits and how to fix them.
1. Paying Full Price
You go about your life spending money on everything at their listed price. But you don’t need to be paying full price, instead use a shopping app for great cash-back opportunities.
Maybe they sound like too much trouble, but they’re not much more trouble than your regular online surfing. Maybe you think you won’t get much of a deal? Let’s look at some shoppers at Walmart:
- Shopper A – Bought 2 12-packs of Pepsi, Lysol wipes, Nature Valley Granola Bars = $12.16
- Shopper B – Bought the same items but used Ibotta shopping app = $8.26
So, in that quick little trip Shopper B saved $3.90 using only one shopping app. Shopper B could use the same receipt with other shopping apps to gain even more savings.
Here are some great shopping apps to use:
Not only will you save money, some of these sites give you free bonus money for signing up and referring friends.
2. Not Comparison Shopping
How many of us just buy without checking prices elsewhere? How many of us went with a company or service solely because a friend or family member suggested it?
Do comparison shopping for every aspect of your life to save money. Compare prices of groceries, utilities, service providers, credit cards, insurance, and everything else.
For example, a friend says to use Company X because he got the best deal. You sign up assuming you’ll get the best deal as well.
But, your friend has no tickets or lost demerit points and drives a newer efficient car. You have a traffic record and drive an older used car. Unknowingly you’re paying hundreds more and you would have saved more money if you went with Company Y instead.
Just remember what may be a good deal for your friend or family member, may not be one for you. Shop around for better savings for you. You can also check out these 10 tips for comparison shopping.
3. Paying the Minimum
You may remember in my post about 8 ways to pay off credit card debt I mentioned about minimum payments.
“the minimum payment amount on your credit card isn’t there to help you financially, it’s there to maximize profit for the credit card company”
For example, you have a credit card with an 18% interest and a balance of $10,000. The minimum payment the company tells you to pay each month is $200.
The interest for a month is about $150. So, $50 towards the principal isn’t very much and in a year it is $1800 in interest payments and only $600 paid on your balance.
The trick is to pay more than the minimum each month to cut down on both the interest paid and the length of time to pay it off.
4. Keeping up with the Joneses
Having a competitive spirit can be a good thing but only if it’s directed towards positively improving yourself (and your family). Sadly, though many people use this to “one-up” their neighbors, family, and friends.
What do I mean by “one-up”? Trying to be bigger and better than the people around you. By buying more expensive clothes, bigger car, bigger house, and so on. This does nothing but cause more debt and financial strain.
I personally know a couple with a huge 5-bedroom home and 2 new SUVs in the driveway – yet they’re eating off a card table in the dining room and most of the house is barely furnished.
Instead of spending money on the newest model car, newest upgraded phone, a bigger TV and other things that you think you need, stick with replacing things as they break.
A little modesty can go a long way, people will respect your modesty and honesty more than what bling you have. If you don’t think this is true, then you have deeper problems or the wrong kind of friends.
5. You buy Brand New
This ties in with #4 that we buy things brand new. But the best way to save money is to buy used or refurbished.
Let me show you some differences:
- The price differences between a new car and a used one are huge. For a brand-new car, you’re paying a markup price of about 2% – 5% added to the sticker price or the invoice price. A 2018 Kia Sorento costs about $34,350 while a 2012 model costs $11,995 – a $22,355 difference!
- Many refurbished items are still brand new but were returned for minor issues. They are repaired and returned to the store and many are still under warranty. Let’s compare – buying a brand-new iPhone X costs $1,249 while a refurbished one only cost $949. A $300 difference!
The same goes for clothing, furniture, décor and other things. Go consignment shopping and it’s possible to find great deals for “almost new” things. I once found a pair of Lee’s Women’s jeans ($39.99 at Walmart) for $7 at a consignment shop.
6. Buying Lottery Tickets
Yep, you’re wasting money on lottery tickets and you can actually get more money from saving that amount every week instead.
First off, the chance of winning the lottery are one in 175,223,510. So, very slim indeed.
Instead, put that money into a savings account and watch that grow. Let’s say you spend $15 on lottery and scratch-off tickets every week. Put that into a savings account with a 0.03% APY that you opened with $100. In 5 years, you’ll have $4,006.06.
Another option to save your money is with Acorns. Acorns will invest your money in stocks and bonds for you depending on the “risk level” you picked.
It costs nothing to open an account and you can start investing with just $5. Their average investment ratio is 0.10%. Fees are $1/month for accounts under $5,000 (but waived if you’re a student).
So, let’s say you opened with $15 and kept putting in $15 a week. In 5 years, you’ll have about $3,900 dollars.
Another great feature of using Acorns is that you can let it round up all your purchases up to the nearest dollar to put into savings for you.
Let’s say you make 4 debit purchases a day and Acorns rounds each one up to 50¢ and puts it away for you. In one year, you’ll have $92 ($104 minus $1/month fee) without doing anything else.
7. Buying Brand or Sponsored Named Products
Did you know that when you buy a big brand name item or a product with a movie or tv character on it, you’re paying more?
You’re paying extra just to have the name brand on it. Let’s compare:
- Men’s Nike Air Jordan running shoes $369.95 at Walmart. Nike Air Max is $69.90, and “Fashion Men” athletic high top basketball shoes are only $28.38
- A Star Wars Icon X-Large black t-shirt costs $19.95 at Walmart while a plain black X-Large t-shirt costs $7.25
Again, does it come down to status and competition? Stop buying big brand names and go generic and you’ll have more money to spend on stuff you really need.
How many times have you purchases warranties, and extended warranties only for them to be totally useless because nothing breaks until after they’ve expired.
Warranties are unnecessary to buy in the first place. Instead, you have several options that may already cover your purchases:
- Most credit cards offer an extra year warranty coverage if you call them, provide the original receipt and the original warranty.
- Some home insurances sometimes cover large item purchases.
- Many people don’t even wait for something to break before they’ve bought the newest and latest version. If it’s an electronic item, you can turn it into cash with Amazon’s Trade-In program instead.
A secret – extended warranties only benefit the salesperson by earning a sales commission on them.
9. Not Taking Advantage of Amazon
You might be using Amazon on a regular basis because they offer good prices, but there are so many more savings you can take advantage of:
- Shoptracker – Get a free $3 each month from your Amazon purchases.
- Subscribe & Save – Save 15% on all orders over $25
- Amazon Prime – not only will you get free shipping, but free movies to watch, free books and free music among other things.
- Amazon’s Trade-In program – turn in your old electronics as well as your old video games, books and movies for a gift card.
- Amazon credit card – Get 3% cash back on Amazon orders, 2% back on restaurants, gas stations, and drug stores, and get 1% back on all other purchases.
Those are just some of the savings you can get on Amazon.
10. Not Taking Advantage of Income Tax Credits
The IRS claims that 20% of Americans don’t claim the income tax credits they’re eligible for. Here are the top three deductibles and its average deductible:
- State and Local Taxes paid – 44.2 million people claimed this deductible with an average amount of $12,514.
- Mortgage & Investment Interest – 33.3 million people claimed this deductible with an average amount of $9,142
- Charitable Gifts – 36.6 million people claimed this deductible with an average amount of $6,058.
The first place to start with savings is at work and your W2. Check what credits you can claim – marriage, dependents, disability, child or elder care, etc.
Then work with an online tax program, or book, that can help you with all your deductions and credits and itemizing everything. If there’s too many, or you own your own business, it’s worth the fee to have a tax professional do this for you.
All the places you’re carelessly spending money will be a very long list. But, I’m going to stop at ten and give you a related list of posts to check out.
- 26 Ways to Save $5000 in a Year
- 13 Ways on How to Live Well on Less
- How to Stop Paying Bank Fees, Investing Fees, & More
- 11 Ways to Pay off Debt Right Now
Bonus Tip – Every time you plan to buy something, simply ask yourself “Do I need this, or do I want this”. With this mindset, you’ll soon recognize more careless spending habits you’ve developed and break them.
Think of this – all the money you’ve stopped carelessly spending can go towards something you really need – a home, a car, college, and so on.
What habits have you discovered that you’ve stopped doing? Let us know in the comments.