Most of us scoff at the idea of just throwing money away. However, you might actually be doing just that — every day. There are a number of practices, seemingly commonplace, that result in wasted money each month.
If you are trying to figure out what has happened to your budget, and trying to pinpoint where your money is leaking away to, here are 9 common ways that you could be wasting your money:
- Credit card balances: Anytime you carry a balance on your credit card, you are paying the price in interest charges. Interest is money you pay for the privilege of borrowing. Stop carrying a balance, and you will find that you have more money in your pocket.
- Interest rates and fees: Call your credit card company and ask for a lower rate on your credit card. In some cases, especially if you are a good customer, you can get a reduction of 2% to 3%. You can also call your bank to ask for fees to be waived. My bank waives one overdraft fee each calendar year — just for the asking. It never hurts to ask if you can have fees waived if you are late once or twice on a payment.
- FSA mismanagement: Your Flexible Spending Account (unlike the HSA) is a use it or lose it situation. If you aren't paying attention, and if you don't use all the money in your FSA each year, you leave that money on the table, and it's wasted.
- Cell phone: Rather than pay for a plan that you rarely use, consider your cell phone usage and your true needs. I have a prepaid cell phone service, and my husband uses an inexpensive pay as you go plan. Our phones aren't fancy, but they fit our needs and they cost a lot less than the smart phone and $100 a month plan my brother has — and rarely uses. Consider things like Virgin Mobile prepaid phone options as a way to save considerably on your monthly bill. Resource: Save Hundreds On Your Cell Phone Bill.
- Car maintenance: The rules are changing with car maintenance. First of all, check the manufacturer's recommendations for the octane level of your fuel. There's no need to spring for the premium 93 grade when 89 will do just fine. Check the requirements, and don't pay extra. You should also look at other maintenance recommendations for your car. Some cars can go 5,000 or more without an oil change now. Don't pay extra for maintenance you don't need.
- Interest free loan to the government: Instead of using your tax refund as a sort of savings account, adjust your withholding so that you aren't getting so much back. Instead, watch for a bigger paycheck and use that money to invest or improve your life another way.
- Late payments: Get organized and be sure that you pay on time. Late payment fees and missed payment fees do more than just impact your wallet; the impact on your credit score can result in paying more in higher interest on auto and home loans.
- Subscriptions you don't use: From superfluous cable channels to a magazine you don't read, subscriptions can cost you. Evaluate your regular subscriptions, and get rid of those you aren't using. From Gamefly to Netflix to that investment newsletter, cancel unnecessary subscriptions and save.
- Failure to shop around: If you aren't shopping around for the best deal, you are wasting money. Regularly shop around for insurance rates, major purchases and more. Do a little research online, and see if you can get better prices on things you buy regularly as well as occasionally.
What are some common ways that you or people you know are wasting money?
Late payments are a huge money waster that are completely unnecessary… and don’t forget to shop around for those things that you renew each year. Businesses love customers that don’t shop around because they can just keep on increasing the rates.
PMI insurance on your mortgage if your equity is below 20%.
Failing to use coupons or stocking up on non-perishables on sale.
Buying new when used is just as good.
Great ones!
The one that is the biggest to me is to shop around. I take about 10-15 mins looking around online before I buy anything.
I think a big one for a lot of people are credit card balances and fees. With late fees, interest rates they just cause you to end up paying 3-4 times the amount you actually charged. Dont get drawn into just paying those monthly payments.
It seems really obvious to most of us, but the truth is that there is a reason that fees provide billions in revenues to banks. Which means that there are probably plenty of people wasting their money in this way.
Eating out! I totaled how much i spent in restuarants last year and it was unbelievable. Working on that this year. May lose some weight too!
Can I get paid to write common sense crap we all already know? Really its a waste of money to have credit card interest. Wow well now that I have read your useless article I have realized I need to go pay my bills on time. I am sure you are reading my response on your smart phone, like it or not with a lot of peoples jobs and standards of living they are pretty much the norm. Have you ever tried to go to ATT and get a regular old phone. I did for my 13 year old they are almost impossible to find. Miranda has written 50 articles on smart Money? Wow maybe I need to change professions
Majortom, while some of these points might be common sense ideas, they’re still things that people commonly due to waste money. Just because it’s common sense doesn’t mean people do it!
Due to how many thousands of people are viewing the article, and some even leaving positive comments, I’d hardly say that it was a useless article.
I personally don’t have a smartphone, I use a pre-paid cell phone from Virgin Mobile. It cost me about $20, and the monthly charges come out to about $6-7/month. It was really easy to find as well. Impossible to find? Hardly. Check out the linked article above for a bunch of sources for pre-paid phones – and even pre-paid smartphones.
It sounds like majortom is only interested in advice that can personally help him and he thinks any other advice should be criticized. What is common sense to someone may be good points to consider for others. People overlook very obvious ways to save money everyday. Since people get so little personal financial education, someone needs to point out things like this. Perhaps Tom overlooked the word ‘common’ in the title before his tirade.
Good advice. I am thankful my parents taught me most of this while I was growing up – but so many people aren’t that lucky and end up making bad money choices.
“Interest free loan to the government” — spot ON. I was really excited to get money back and then realized that my happiness was misplaced.
How about “letting food spoil in the fridge” — that one is akin to throwing away five dollar bills.
Great one, frugalportland! If you find yourself throwing out a lot of food, maybe it’s time for meal planning and a grocery list. That could save money — and result in better planned, and probably healthier, meals.
Late payments more fees. Carry over balance, more fees. Interest rate and fees….interest rate and fees! Pretty soon there will be an excessive oxygen intake fee for people who exercise.
When I think of how much of my money I gave to Bank of America, I just shake my head. But I think you missed on of the greatest money leaks in the world: Indulgences that have become routine.
Checking out the latte and afternoon soda spending can be a critical portion of examining your spending.
I agree, bax! Just think of all the things that were “luxuries” or “wants” a few years ago, and that have now been almost magically transformed into “needs.” Somewhere, we might have lost track of our priorities.
By cutting waste in your finances you’ll have more money to save, invest, and grow your net worth.
I tried point number 2 couple of months back and it does work. One of my close friends suggested this technique and I got 2% reduction in interest.