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The day-to-day habits that we live by are what shapes our present and future life. Unfortunately, when it comes to habits pertaining to personal finances, most people are irresponsible and even reckless. In fact, according to the American Savings Statistics, close to 70 percent of adults in the U.S. have less than $1,000 saved for rainy days. This is highly disconcerting, considering the fact that the average emergency room visit in the country is close to $1,400.
To help you save more over time, it’s important to shed any money-wasting habits that may be weighing your finances down. Here are the top 10 culprits that prevent people from saving and growing their money:
Signing Up For Too Many Subscription Services
Today, there is an unprecedented number of entertainment services that you can subscribe to for a monthly fee. Content-on-demand platforms, such as Netflix and Hulu, are popular subscription services that people sign up for, both of which can cost you at least $10 each per month. There are also monthly subscriptions for dog toys and treats, magazines, financial data services, etcetera. These recurring expenses, although seemingly small, can collectively add up to a hefty sum over time. Limit your subscriptions to essentials, and avoid having multiple subscriptions of a similar service.
Auto Renewing Your Monthly Plans/Services
The option to auto renew a service is convenient, but it can also lead to paying for services that you no longer need or want. Most companies will issue a refund, but it takes time and a phone call to get your money back. Auto-renewing services also leave you at risk of getting your bank account overdrawn if the payment is charged at the worst possible time. Rather than go through the hassle and stress, avoid setting your services to auto-renew at the start of each month, especially for services that you sign up for on a free trial basis.
Buying Brand Names
Another common money wasting habit is buying brand names instead of generic alternatives. Majority of generic choices that you will find at supermarkets and shopping centers are equally reliable but come at significantly lower price tags. Advertisement campaigns have convinced us that brand name products are a much better choice over generic brand names even though they are comparatively similar in quality. Do your own research as to where and how a consumer product is manufactured, what ingredients or materials are used, and how well received it is by recent customers.
Dining Out
In today’s fast-paced lifestyle, it’s become increasingly difficult to prepare your own meals and cook good food. You could chalk it up to lack of time and energy from a busy work schedule. Others reason their lack of skill in the kitchen. Dining out, however, has dire financial consequences that many people ignore. Depending on location and choice of cuisine, the cost per meal per person can range anywhere between $5 to $30. Multiply that to the number of times the average American eats out every week, which is 4, and the cost can be alarming. Rather than dine out, save money by cooking meals in bulk, parsing them into containers, and storing them in your fridge, or what today’s generation calls “meal prepping”.
Not Investing Enough
Bad habits concerning personal finances don’t always stem from where and how you spend your hard-earned cash. It may also come from your inability to grow it through passive investments over time. One of the good habits that successful people do is investing a portion of their savings into high-yielding assets, be it stocks, mutual funds, commodities, or cryptocurrencies. Rather than having your available funds sitting idly in a savings account that yields one percent each year, invest it in low-risk assets that can yield higher returns.
Overdoing Maintenance
Although it’s prudent to be on top of routine maintenance of your personal belongings, such as your car, electronics, and appliances, overdoing it can have a counterproductive effect on your personal finances. For example, if you are regularly changing your car’s oil for every 3,000 miles it clocks in, you are essentially tripling your cost over time as many cars can last for more than 8,000 miles without getting their oil changed, especially newer models that use synthetic oils. The same goes for professional carpet cleaning or frequent routine visits to your physician.
Not Haggling For Purchases
This is one of the many good habits that today’s generation seldom exercise. Since most of the shopping happens online, haggling has become a lost skill. That said, haggling is still one of the easiest ways to save money, especially when buying big-ticket items, such as new electronics, a new family vehicle, or a home. Learn the simple habit of asking for a price reduction. There is nothing to lose or be ashamed of by asking. And in most cases, you’ll get a good discount, if not some freebies thrown in at the very least.
Lending to the Wrong People
Of the many bad habits that waste money, lending to people who aren’t creditworthy is a very tricky one to avoid. You never know when a close friend or relative will ask you for a small loan to bridge gaps in their personal finances. And if you have it, the most likely reaction would be to lend them the money without second thoughts. Being blindly generous and helpful can greatly affect your ability to save money and grow your investments. Avoid being emotional when it comes to the subject of money and your circle of people. New habits to learn when dealing with this sensitive subject is to set clear boundaries and let them know that you’ll be treating the loan as a business transaction rather than a personal one and that they should do the same.
Buying Everything
Sure, there are things you wouldn’t want to buy secondhand – dining utensils, personal hygiene kit, food, pillows, etcetera. Typical consumer mindset, however, tends to waste money by buying everything brand new – car, appliances, electronics, luxury clothing, furniture, and the list goes on. Avoid this restricting mindset by acknowledging the fact that many secondhand items are still in “brand new” condition and not as dirty or sketchy as you skeptically think.
Underpaying Their Debt
Of course, it’s better not to have debt at all. But in this day and age, debt is inevitable and sometimes necessary. For instance, applying for and getting a credit card is the typical first step to building a credit score, something you’ll need to apply for loans, mortgages, etcetera. If you do have debt in your name, try to pay off as much of it in as little time as possible. Although seemingly infinitesimal, even single digit APRs can snowball into massive, money wasting debt.
Final Thoughts
You may just be guilty of one or all of these bad habits, but the important thing is to look at your finances from an unbiased and objective POV. Start building new habits that cut back on expenses and add on your money-making assets with the aforementioned tips above.