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Whether you have achieved the level of success that you have been striving for, or are still working on it, you will need to make purchases. And let’s face it, some of those purchases might not be necessities but splurges or celebrations for accomplishing our mini-goals or even crushing our big ones. However, not all things are made equal and some are just harmful. Here is a list of things that you are probably wasting money on.
1. Jewelry
First, you are wasting money when buying fine jewelry. Why? Because the markup on it is usually 50-110%.
That is why you see massive sales of “30% + another 20% off” and you think that you are bargain shopping and getting a deep discount. However, you have to understand that they wouldn’t give it away. And despite the appearance of giving a deep discount, they are still making a decent profit.
Therefore, if you are looking at it as investment, look elsewhere for wealth creation. If you find that you need to sell it, for whatever reason, you will not get a lot out of what you put into it. And, unless the piece has a large, high quality stone, you will only get money for the metal.
Also, recently, I heard a story about a friend of a friend who had a “gold party.” These gold parties are where you and your friends bring your old jewelry to another friend’s house who is the hostess. And then there is someone, maybe a pawn broker or a gold re-seller, that is there to give you money in exchange for it.
However, in this particular case, everything that the women had purchased from some of the mall stores was fake! I cannot confirm the accuracy of this story, but beware from whom you purchase. Even the good guys look bad.
One exception that you wouldn’t be wasting money, of course, any branded designer jewelry such as Tiffany & Co. or Cartier. Though they cost extra money, these items will retain their resale value and depending on the scarcity and/or age, may actually net you more cash back.
Another exception is jewelry created by famous designers as well, like Harry Winston, David Yurman, Roberto Cavalli, etc. There are too many to name but most of them have quite a following and the devotees will have deep pockets for coveted and vintage pieces.
2. Wasting Money buying Low Quality Shoes
Bad shoes will not serve you well if you are wearing them every day or engaging in an activity where you need good quality equipment for work or play. Bad shoes are big money wasters.
For example, if you are into hiking, cheap shoes will ruin your feet and probably fall apart quickly. And if you walk a lot for work or need to be on your feet, you will definitely not want to be cheap when it comes to footwear.
Going to the orthopedist is expensive and surgery is even more expensive.
Knowing that footwear was very important, when I started running, I went to a specialty shop where they had me walk and run so they could see my stride and the way my foot fell.
It seems that my arches would fall slightly so I needed specifically different shoe than most people. I NEVER would have known this had I not gone to a specialty store and worked with a consultant.
I paid a lot more, however, those shoes made running so much better on my body, I enjoyed it more and they lasted quite a while.
Also, there is a resale aspect to better quality shoes and designer brands. Check out my article on why luxury brands are worth it.
3. Wasting Money buying Excess clothing
There are people that cannot control themselves when it comes to clothing. They are wasting money purchasing anything and everything that catches their eye.
They have outfits that they have worn once and others that still have the price tags on. Their closets are so full that they don’t even know what they have.
One of my friends has a daughter that has so many clothes that my friend noticed that her daughter hadn’t washed clothes for three weeks. And she STILL hadn’t even made a dent in her closet.
It’s better to have fewer items of higher quality classic clothing from which you can make different outfits. A few trendier inexpensive items that are seasonal are okay but having that many clothes represents a lot more choices.
More choices lead to time wasted in caring for, picking out and managing a large wardrobe.
If you know you are sucker when you are window shopping, avoid bringing your credit card, debit card or cash to avoid impulse buying. If you must bring something, bring gift cards where you have a spending limit for those impulse buys.
Shopping sales is a smart way to not pay full price and spend less money will keep your bank account in good shape.
4. Wasting Money With ATM fees
If I don’t use my bank’s ATM, I can pay nearly anywhere from $2-$8 for a transaction. A few of these a week can take a big chunk out of your bank account. Make sure you know what your bank’s rules are and follow them.
Prepare for your cash needs by making sure you have the proper funds for your day or week beforehand.
Why pay money to access your own money? Unless it is an emergency then I don’t see why you should.
5. Wasting Money On Overdraft fees
These bank fees draw from your future balance.
We know a guy who paid nearly $34 for a pair of yellow, rubber, dish washing gloves (that would normally be about $2) because he overdrew his account by $1. Funny thing is, he is a VP at a bank and even he thought it was so hilarious he wrote a paper about it for grad school.
If you are paying fees for insufficient funds you are definitely wasting money.
6. Wasting Money ON Lottery tickets
Another big dip into your savings account are lottery tickets. You are buying a fantasy when you buy lottery tickets.
Mathematically, with the odds, you could die in your shower, get struck by lightning or attacked by a shark (and there are about 19 per year in the US) more easily than winning the lottery.
Save that money and invest it. In time, you will have a much nicer pile of cash than you would have by hoping for the winning numbers.
In full disclosure, we do sometimes indulge when the pot is really big.
7. Wasting Money On Coffee
We love coffee. It’s one of life’s pleasures and we drink it every day.
That said, we do not buy it every day from a gourmet coffee shop. Most of the time, we make it at home because no one should operate a motor vehicle prior to drinking at least two cups. You’re welcome world.
However, when we do buy it from the premium coffee shop, we do it for a special occasion so that we really appreciate it.
As for the specialty drinks, most of those contain ingredients that I do not consume. And secondly, the smallest size is about $5.
Fun Fact: The most expensive Starbucks drink ever was $54.75 and it had 60 shots of syrup.
If you are ordering drinks like this, I can figure out how you can quickly stop wasting money. First, by keeping your money in your wallet and secondly by avoiding the medical costs associated with diabetes.
So if you find yourself spending too much money on the drive-through line at Starbucks, it’s a good time to think of a better option for your coffee addiction.
8. Wasting Money buying Convenience items
I’m not actually talking about those in home delivery subscription services that have an unprepared meal in a box. I think in many cases, those can be worth it. Especially if you are someone who travels a lot for work and ends up wasting food.
However, if you think about it, every single item in the grocery store is a convenience item. I mean, did you grow the wheat to make the flour or the bread? No? Then you are buying convenience.
What you purchase will determine the level of convenience for which you are willing to pay. Buying the ingredients to make bread will be cheaper than buying the bread itself. And buying bread from bread aisle will be cheaper than buying the bread from the bakery section.
Pound for pound, buying the bread from the bakery section and lunch meat from the meat section will be cheaper than buying a pre-made sandwich from the deli counter.
For how much convenience are you willing to pay? Conversely, how much time are you willing to trade for doing it all yourself?
Though convenience stores have become aware of the fact that this is a growing trend and are making their selections more healthy, they are still the most expensive food options.
According to several sources, including Convenience Store Decisions article which features data and analysis from over 150 operators and 1,000 consumers in July of 2016, 41% of consumers are buying more convenience store prepared items than two years ago.
43% of convenience store visitors buy something that they hadn’t planned on, usually a snack. So not only do you pay the absolute most for prepared groceries, you usually buy something unplanned and in many cases, unhealthy.
When you are building your wealth, working on your plan or trying to work on financing your ventures, buying convenient items may or may not make good financial sense.
9. Wasting Money bUying Food that you don’t, won’t or shouldn’t eat
If you are not careful with what you buy, then there is a large chance that you have food waste. Average American households wastes around 25% of the food that they buy. Meal planning, bulk shopping, bulk cooking are all ways to lower food waste and consequently, food costs.
Another way to avoid wasting money is to order your groceries online and pick them up. Many grocery stores are now delivering groceries even in suburban areas. This will help with impulse shopping and you will know your total beforehand. Also, it is a great timesaver.
One of the best ways to save money is to buy store brands when possible. Most stores carry private label goods that are very similar, and just as good if not better than the name brands. The name brand manufacturers have to pay for marketing and advertising and therefore, cost more. In fact, stores like Aldi and Trader Joe’s are almost all private label. So, there is no need to be wasting money on name brands.
Another way to save is to stop buy bottled if possible. Now I know that there are many places where tap water is toxic and I am not talking about you if that is your situation.
However, if you can invest in a water dispenser, there are many grocery stores where you can fill your own for cheaper. And there are companies that deliver right to your home.
You can refill your own reusable container to take with you. The bottles are reused and recycled so it’s better for the environment than the individual bottles.
In order to stop wasting money, a friend of mine got a free trial period subscription services offer from several different meal prep box companies. She tried the free trials to determine which worked best for her and her family.
She was often traveling for work and her husband didn’t cook much when she was traveling so she would have to dump most of the contents of the refrigerator out when she got home.
Using the service when she was home saved her so much money. On the other hand, continuing to receive unused subscription services is definitely wasting money.
So you really must assess your individual situation to determine how to optimize your food budget.
On the other hand, unused subscription services are definitely wasting money.
10. Wasting Money by Buying An Expensive House
This is a mistake a lot of people make when money starts to come in. Sometimes, to look or feel like they have “made it,” they will purchase a house that may be too much of a financial burden. And sometimes it may be that, at the time, that their money was steadily coming in, and then later, it wasn’t. It happens.
In the most recent burst of the housing bubble, houses were worth less than the money owed on them, so it became impossible to sell. During the bubble, the economy was bad and many people had lost their jobs. With no way to pay the mortgage, many people lost their homes and ruined their credit.
Refinancing your home too frequently can potentially be wasting money due to several reasons.
While refinancing can offer benefits such as lower interest rates, reduced monthly payments, or accessing home equity, doing it too often can outweigh these advantages.
Firstly, refinancing typically involves upfront costs, which can include application fees, appraisal fees, closing costs, and other associated expenses. These costs can add up quickly and erode the potential savings from a lower interest rate or reduced payments.
When you refinance frequently, you may not have enough time to recoup these costs before considering another refinancing, leading to a cycle of perpetually paying fees without realizing significant financial gains.
Secondly, each refinancing resets the clock on your mortgage term. If you refinance too often and consistently choose longer mortgage terms, you might extend the time it takes to pay off your home loan. This can result in paying more in total interest over the life of the loan, even if you secure a lower interest rate each time you refinance.
Lastly, refinancing too frequently might reflect a lack of long-term financial planning or stability. Constantly changing your mortgage terms can make it challenging to build equity in your home, accumulate savings, or achieve other financial goals.
It’s important to carefully consider the potential benefits and costs of refinancing and ensure that the decision aligns with your overall financial strategy.
One strategy is to pay off your mortgage as quickly as possible or purchase a home with cash. Some say that this is leveraging cheap money (low interest loans) and your money is better spent on other things. However, housing is one our big expenses and once the mortgage is paid, that money becomes available for investing.
When you do this, it is yours. You have stability and only have to worry about upkeep, insurance and taxes. With the money that you will NOT be putting down on a mortgage every month, you will easily be able to afford downturns.
Another strategy is to merely pay one extra payment per year. This reduces your mortgage repayment by 4-7 years and saves thousands in interest.
If one big lump is too big, another strategy is to divide your monthly mortgage payment by half and pay it every two weeks instead of once a month.
One person would make a small payment every day. If she saved $12 at the grocery store by shopping sales, she paid it to her mortgage. If she found $5 in the pocket of an old coat, she paid that to the mortgage that day.
While refinancing your home can offer advantages, doing it too often can lead to unnecessary upfront costs, extended mortgage terms, and a lack of financial stability. It’s crucial to assess the potential benefits against the associated expenses and consider your long-term financial goals before deciding to refinance or pay off your house early.
11. Wasting Money WIth Tobacco products or Vaping
Tobacco products or vaping can undoubtedly lead to wasting money, with detrimental effects on both your health and your finances. The initial cost of purchasing cigarettes, vaping devices, or related products is just the tip of the iceberg.
Over time, the ongoing expenses associated with these habits can accumulate significantly, draining your wallet and hindering your ability to allocate funds to more productive endeavors.
Beyond the financial aspect, the health consequences of tobacco products and vaping can be severe and costly. Medical bills, treatments, and potential lost income due to health-related issues can further contribute to the financial burden.
By engaging in these habits, you risk not only your well-being but also the potential to accumulate substantial expenses that could have been prevented. Doctors, tests and treatments are expensive.
These are difficult to imagine when you are young but look at anyone who has smoked their whole lives. They look older and are in the majority of cases, are in poor health. Oh and cancer and emphysema suck…a lot.
Considering the dual impact on both health and finances, it becomes evident that indulging in tobacco products or vaping is an unfortunate way of wasting money. Breaking free from these habits not only leads to immediate cost savings but also offers the prospect of improved health and a more robust financial future.
Redirecting the funds previously spent on tobacco or vaping toward savings, investments, or experiences that enhance your well-being is a wise step toward eliminating this wasteful practice.
12. Wasting Money WITH A High-Cost Cell Phone Plan
Opting for a high-cost cell phone plan can result in wasting money that could be put to more practical use. While advanced features and unlimited data packages might be tempting, it’s essential to evaluate whether they truly align with your communication needs and financial goals.
Many people are drawn to high-cost plans due to the allure of premium features, but often, these extras go unused or provide marginal value. Paying for services you don’t fully utilize equates to wasting money that could otherwise be saved or invested.
It’s crucial to scrutinize your cell phone usage patterns and assess whether a less expensive plan could fulfill your requirements just as effectively.
Additionally, with the prevalence of competitive cell phone market offerings, it’s easier than ever to find affordable plans that provide ample data and coverage. Overpaying for a high-cost plan could mean missing out on potential savings that could contribute to your overall financial well-being.
By choosing a plan that meets your needs without excess frills, you can avoid the trap of wasting money on inflated cell phone expenses.
Were not going to say that if you are legitimately using your phone for business purpose and need a large data plan then it is worth it. However, if you are burning through data YouTube and Instagram (unless, course you are a YouTuber or social media influencer), then you might want to re-think your usage.
It’s a good idea to periodically check the different cell providers out there for the best plan for you.
13. Wasting Money by Dining Out
Dining-out expenses can often be considered a wasting money when it becomes a frequent and unchecked expense. While enjoying a meal at a restaurant can offer convenience, social engagement, and a break from cooking, excessive dining out can have negative financial implications.
Firstly, the cost of restaurant meals, including taxes, service charges, and tips, can significantly add up over time. The markup on food and drinks at restaurants is usually higher compared to cooking at home, where you have better control over ingredient costs. This can lead to overspending on food that might not always be of superior quality or nutrition compared to what you could prepare yourself.
Secondly, dining out involves additional expenses beyond just the food itself. Costs associated with transportation, parking, and even the time spent traveling to and from the restaurant can contribute to the overall expenditure. When these costs are repeated frequently, they can strain your budget and hinder your ability to save or invest in more meaningful ways.
Lastly, dining out can lead to a lack of awareness about portion sizes and nutritional content, potentially impacting your health and wellness goals. Preparing meals at home allows you to make conscious choices about ingredients, portion control, and cooking methods, which can positively impact both your budget and your overall well-being.
While occasional dining out can be a pleasant and enjoyable experience, practicing moderation and balance, along with preparing more meals at home, can help you avoid unnecessary expenses and make more mindful decisions about your spending habits.
14. Wasting Money with Credit Card Debt
Credit card debt is often considered a waste of money due to the significant financial burden it carries. When you carry a balance on your credit card and don’t pay it off in full each month, you incur high-interest charges. These interest rates can be substantially higher than other forms of borrowing, making credit card debt one of the costliest ways to borrow money.
The money you pay in interest on credit card debt doesn’t contribute to any tangible assets or investments. Instead, it goes toward servicing the debt itself, essentially diverting funds from more meaningful financial goals. This can hinder your ability to save for the future, invest, or make important purchases, as a significant portion of your income goes towards paying off accumulated debt.
Furthermore, credit card debt can have a compounding effect, making it difficult to break free from the cycle of debt. As interest accrues on the outstanding balance, the debt can grow rapidly over time, making it even more challenging to repay.
This can lead to a cycle of minimum payments that barely make a dent in the principal amount owed, prolonging the time it takes to become debt-free.
In summary, credit card debt is a waste of money.
Holding a balance on a high interest rate credit card can hurt your financial health in the long run, prevents you from achieving meaningful financial goals, and can lead to a long-term cycle of debt that is difficult to escape. Especially if you only make the minimum payments and continue to spend recklessly.
Paying credit card interest for things that you don’t need is a real budget leak. It’s important to use credit cards responsibly, pay off balances in full each month, and avoid carrying debt whenever possible to ensure your financial well-being.
15. Wasting Money by Gambling
Gambling is often considered wasting money due to its inherent risk and the unpredictable nature of outcomes. When engaging in gambling activities, individuals typically wager money with the hope of winning more, but the odds are usually stacked against them.
The majority of casino games, lotteries, and betting platforms are designed to generate profits for the operators, meaning that over the long term, the vast majority of participants will lose money.
The allure of potential big winnings can lead people to overspend and chase losses, resulting in financial stress and significant monetary losses.
The excitement and adrenaline associated with gambling can cloud judgment and lead to impulsive decisions that go against sound financial planning.
Moreover, the money spent on gambling often provides little to no tangible return. Unlike investments that can grow over time or purchases that provide lasting value, gambling expenditures typically result in temporary entertainment at best and significant financial setbacks at worst.
This money could be better allocated toward savings, investments, or experiences that offer more meaningful and lasting benefits.
In summary, gambling is often considered wasting money because it carries a high risk of financial loss, provides little tangible return on investment, and can lead to impulsive and detrimental spending behavior. Responsible financial planning involves avoiding excessive gambling and focusing on more secure and productive ways to manage and grow your finances.
FAQs on Wasting Money
How do I stop wasting money?
How to Stop Wasting Money:
1. Create a Budget: Outline your monthly income and expenses to get a clear picture of your financial situation. Be aware of your current spending habits.
2. Categorize Expenditures: Classify your spending into categories and identify areas where you can cut back.
3. Track Expenses: Use apps or spreadsheets to meticulously track your spending, gaining a comprehensive overview of your financial habits.
4. Prioritize Needs: Put essential needs ahead of discretionary wants, ensuring that your basic requirements are met before indulging in non-essential purchases.
5. Practice Mindful Spending: Question the necessity of each purchase, considering its long-term value and impact on your finances.
6. Set Financial Goals: Define clear objectives to work toward, motivating yourself to avoid impulsive buying and focus on your priorities.
7. Establish an Emergency Fund: Create a safety net of savings to cover unexpected expenses, preventing the accumulation of debt during challenging times.
What is it called when you are wasting money?
The term commonly used to describe excessive spending without prudent consideration is “financial recklessness” or “squandering money.” This behavior involves lavish expenditures without adequate contemplation of the long-term repercussions or the value derived from purchases. Such practices can result in financial instability, debt accumulation, and missed prospects for savings and investment.
What are some of the most common ways people are wasting money?
Frequent dining out, impulsive shopping, excessive spending on subscription services, high-interest credit card debt, and failure to compare prices for essentials like insurance or utilities are among the prevalent methods people squander money. Falling prey to marketing ploys, forgoing price negotiation, and neglecting a healthy lifestyle can further contribute to wasteful financial behavior. Cultivating sound financial habits, such as preparing meals at home, crafting shopping lists, terminating unnecessary subscriptions, and actively seeking avenues to economize, can help mitigate these tendencies.
What is the 50-30-20 Rule?
The 50-30-20 Rule, also known as the “Budgeting Rule,” is a guideline designed to manage personal finances effectively. It proposes dividing post-tax income into three categories: allocating 50% for essential needs (housing, groceries, utilities), dedicating 30% to discretionary wants (entertainment, dining out), and reserving 20% for savings and debt repayment. This rule furnishes a straightforward framework to ensure prudent financial allocation, maintaining equilibrium between necessary expenses, enjoyable activities, and securing one’s financial future. Adjustments can be tailored to individual circumstances, but the rule offers a foundational basis for responsible monetary management.
The Bottom Line on Wasting Money
With all of these, besides tobacco, there may be exceptions. And occasional treats are fine. However, if you are overindulging, then you are hindering your financial and health goals. Be aware of your habits, adopt new good habits and accomplish your goals faster.
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