Kiersten Saunders – December 3, 2021 – Plugging these loot leaks now may boost your retirement fund by six figures over the long term.
Just when I thought I didn’t have any additional room in our budget, I found a recent OnePoll survey, conducted in partnership with insurance company Ladder, that revealed the average American spends almost $1,500 a month on nonessential items like coffee, streaming services and gym memberships. Now, if the idea of wasting $1,500 a month seems incredibly high, you’re not alone. Trust me, I gasped too, and I talk about money for a living!
But after reading the report and digging into my own bank statements, I realized that even though I didn’t find $1,500 worth, I wasn’t exempt from frivolous spending and had more flexibility than I thought. Avoiding these five common money traps can help you save more money and keep your budget on track.
Money Trap No. 1: Throwing away leftovers or expiring food
’Tis the season for splurging, but how often have you found yourself throwing away leftovers or wilted vegetables from this week’s grocery run? Food is one of the largest expenses after housing, yet Americans throw away 30 to 40 percent of the food we buy.
Food waste is a trillion-dollar problem but it can also be silently eroding your extra cash. Do yourself a favor and look at how much you spend on food every month, then assume you can save 20 percent of that simply by planning your meals in advance and putting together a detailed grocery list before you go to the store. My husband Julien used to be a chef and he’s a big fan of cross-utilizing ingredients, aka “planned leftovers” or “nextovers.” That’s when you plan several meals using the same ingredients. For example, if you were to buy a rotisserie chicken, you might have chicken and rice one night, a chicken salad for lunch, then quesadillas for dinner the following day. Throughout the week, if you find that your greens or herbs are starting to wilt, try to find a secondary use for them before throwing them out. For example, your leftover herbs or roasted vegetables can be blended into sauces, and foods like bread can be kept in the freezer beyond the expiration date, as long as you don’t see any mold.
Money Trap No. 2: Buying bottled water
Bottled water is one of those sneaky expenses because it’s typically not a standalone purchase, so it’s hard to track. The same goes for other bottled drinks. If you get thirsty in the checkout line, that extra $2 for a cool beverage just gets lumped into your grocery bill. Or if you’re in the drive-through and don’t want the soda that comes with your meal, the $1 upcharge for bottled water just gets added to the check.
These decisions feel small in the moment, but the survey indicates they can add up to almost $18 month. It doesn’t sound like much, but unnecessary purchases like these take a toll.
Money Trap No. 3: Late fees
Even for the most organized among us, it’s really easy to miss a credit card payment. According to a 2021 report by WalletHub, 47 million Americans expect to pay a late fee this year! These fees cost anywhere from $25-$29 for your first late payment, and upward of $35-$40 if you’ve been late before. But on top of that, you’ll be charged interest, and because payment history accounts for 35 percent of your credit score, you could see an impact on your credit report.
The number one reason people miss a payment is that they simply forget. Setting up auto-pay is a reliable way to ensure your payments arrive on time, if you know you’ll have enough funds to cover the payment. If you’re not as confident about your account balance, you’ll want to set up additional alerts and payment reminders on your calendar, phone and any budgeting apps you use. But even if all of those measures fail, don’t be afraid to call your card issuer and ask for a one-time exception, especially if it’s your first time.
Money Trap No. 4: Subscriptions
Now that more and more services have gone digital, subscriptions continue to be a big business! In 2019, people were spending $640 on digital subscriptions according to the New York Times and that number was up 7 percent from the same survey taken two years prior!
Subscriptions are one of those expenses that are easy to forget about once you sign up. Recurring charges from services like streaming platforms, cloud storage or dating apps can post to your account whether you’re actively using the service or not. Review your financial statements for automatic payments every month and see if there’s anything you need to unsubscribe from. And you don’t have to wait for it to expire either, some companies will prorate your refund if you cancel payments ahead of time.
Money Trap No. 5: Impulse purchases
Retailers are great at encouraging us to shop beyond our list. We’ve all told ourselves that we’re going into the store for one thing, only to fall victim to grabbing trinkets from the holiday-themed bins displayed at the front of the store. This little indulgence may feel good in the moment but, like everything else, it adds up.
The OnePoll survey says the average American makes five impulse purchases a month and spends $109 a month on unplanned purchases. If you’re low on willpower, there are a couple of options to cut back on your impulse shopping. A tried-and-true technique is carrying just enough cash, so there’s minimal room to make impromptu purchases. However, since a lot of businesses still aren’t taking cash, another option is to explore curbside services and avoid going into the store at all.
Try a few of these small tweaks during this holiday season to help you stay disciplined and keep more of your money working for you.