Personal finance sounds simple enough, in theory. We all know the personal finance basics like saving and budgeting. But, in practice, the money that we’re supposed to be saving for retirement (or investing opportunities) often seems to disappear before we can stash it away. What’s going on?
What’s going on is that we’re wasting that money. It’s slipping through the cracks and going toward things that we don’t really need, or situations that could have been avoided. Here are a few money-wasting crimes I’m sure we’re all a bit guilty of committing.
Eating out adds up.
Did you know that Baby Boomers are more likely to waste money on cable television, whereas Millennials say they waste money on entertainment, but don’t cite cable as a common expense? Our expenses seem to vary with age, but there are a few things that bring us all together, and dining out is one of them. Across the generations, we’re all spending too much money on eating out. We’re also burning money when we dine in, because we’re ordering too much takeout (big city dwellers are especially prone to throwing away money on takeout).
It’s okay to eat out or get takeout once in a while, but it’s almost always going to be cheaper to go grocery shopping and do some cooking at home. If you’re always ordering takeout or heading to the restaurant, then you’re going to end up spending way more money than you should just on food. So try to develop at least a small repertoire of recipes that you can cook, and get groceries regularly so that you’re getting fresh, healthy meals for a fraction of what you’d pay for takeout or dining out.
DIY isn’t always the smartest choice.
Nobody likes spending money on repairs and maintenance. But if you’re not careful, being stingy on repairs can actually cost you more. When we buy something pricey, like a house, a car, or even an iPhone, we need to take care of it.
Let’s talk about that iPhone. An iPhone 7 Plus screen replacement doesn’t have to be overwhelmingly expensive, but it’s an expense some people will try to avoid. But then what? You’ll probably end up buying a new iPhone sooner than you otherwise would. The smarter thing to do would be to make your current phone last. Get the repairs, arm your phone with a screen protector and case, and save money.
These lessons go double for things like your home, where maintenance and up-front investments can help you avoid costly repairs down the line. Think about your car: paintless dent repair is an expense, sure, but if you leave the dent and get body rust on your car, you stand to lose a lot more. If you make sure not to skimp on maintenance and repairs, you’ll often end up spending less in the long run and the resale value of your vehicle will be higher.
Overusing (and underpaying) credit cards can put you in a hole.
Credit cards are one of the biggest money-wasters of all. They’re bad for our financial health for a variety of reasons, including the ways in which they affect our spending habits and their ability to multiply a few wasteful purchases into ballooning debts.
When we whip out a credit card instead of counting out cash, we’re more likely to spend more money than we otherwise would. Studies agree that paying with plastic does something to our brains that makes us more willing to part with our hard-earned money.
Then there’s the fact that credit cards create debt. If you pay off our bill every single month without fail, you’ll be in pretty good shape. But if not? You’d better be ready for steep interest rates. Credit cards create toxic short-term debt, and that’s a big waste.
So be careful. Spend smart, and use cash when you can. If you can plug the holes that your money drains out of, you’ll be able to save more and build a brighter financial future.