- Americans waste money on a variety of things, some of which are far more common than others.
- Consider diet, bank charges, and discretionary spending.
- By knowing where your money is wasted, you can free up cash for more valuable pursuits.
Check out our selection of the best no annual fee credit cards for 2023.
How much money do you waste on average per year? If you’re like most Americans, you might not understand it at all. But with that in mind, here are seven common ways people waste money, along with some suggestions on how you might be able to cut back on unnecessary spending.
1. Eating out
Grocery is an essential expense, but restaurant dining is not. The average American family spends about $3,500 a year eating out, which is about half of the food bill.
In all fairness, it’s perfectly fine to treat yourself to a meal at a restaurant or take out from time to time. However, it’s important to be aware of how your costs will increase in the long run. You can spend part of your income on eating out, but make sure it’s reasonable.
Credit card rates have risen significantly over the past year and a half or so as the Federal Reserve (Fed) has aggressively raised benchmark interest rates to curb inflation. And you might be surprised at how much the average American pays on credit card interest alone.
The average American credit card debt in 2022 was $7,279 for those with a balance. The current average credit card interest rate is about 24%, which equates to about $1,750 being paid to banks annually for the privilege of borrowing money.
If you’re wasting money on credit card interest, consider transferring your balance to a new card with 0% first annual interest. Why don’t you consider using a personal loan to consolidate and lower the interest rate?
3. Underused memberships and subscriptions
I am guilty of this. I had a family gym membership at his local YMCA before the COVID-19 pandemic, but when the YMCA closed, I joined another gym (my favorite gym) and still I pay for both gyms.
Many Americans have subscription services that can be discontinued. It’s not just gym memberships, it’s newspapers (print and online), magazines, apps, software, streaming services, and more.For example, do you really need as many streaming services as you are paying for? repetitive An expense that may sound much less than it actually is. Canceling a $19/month subscription would save him over $1,100 over five years, so take some time to see if there’s a subscription you can live without.
understand. The prospect of winning hundreds of millions of dollars in lottery jackpots can be quite tempting. And these scratch tickets are a lot of fun.
But one thing many Americans don’t realize is that the odds on lottery games are usually so bad that you’d be better off spending that money in a casino. Casinos usually pay out around 90% of the wager, although it varies a bit from place to place. This means that the average person who has played $100 worth of spins on his slot machine can expect to win $90 after that. On the other hand, lottery payouts can drop as low as 50% in some cases.
5. Bank charges
With so many great online checking and savings accounts these days, paying bank fees just doesn’t make sense. Many branch-based checking accounts charge monthly maintenance fees if certain requirements are not met, which can be well over $100 on an annual basis.
ATM fees are also a waste of money most of the time. Now, bank customers may need to withdraw money from ATMs that are not free, but most financial institutions offer extensive ATM networks. If your network doesn’t, consider switching if you need it on a regular basis. Access to cash.
Of course, certain types of insurance are absolutely necessary. In most places you need car insurance to legally drive a car. To name a few, homeowners insurance is an absolute must if you own a home.
However, there are some insurances that most people don’t normally need. For example, too many people buy car rental insurance even though standard auto insurance coverage applies to rental cars.
Have you ever purchased travel insurance when booking flights and hotels? Did you know that most travel credit cards already include travel insurance? These are just a few examples, but the important thing is: Before you purchase any type of insurance other than the standard and required coverage type, do your homework to see if you need it.
Additionally, it’s wise to check from time to time to make sure you’re not overpaying for the insurance you need. For example, it doesn’t take long to get several car insurance quotes. You may also be surprised at how much you can save.
7. Yours want but not necessary
Last but not least, you may be surprised at how much money you spend on items and services you don’t really need. And the data show that the situation may have gotten worse in the last few years. Ascent’s COVID-19 Spending Trends survey shows that 51% of Americans still shop online more than they did before the pandemic.
Many financial planners use the 50-30-20 budgeting rule. This means that 50% of his money will have to be spent on necessities such as housing, clothing, utilities and transportation. Then you should spend 30% on what you need. want, 20% should be devoted to improving the financial situation. This could mean saving for retirement, paying off debt, or building an emergency fund.
One smart way to see how much of your income goes into the “want” category is to collect your bank account and credit card statements for the last two months. He goes through them line by line, highlighting anything he didn’t need to buy (this is also a great way to find memberships and subscriptions that can be removed).
The point is not to stop buying things you don’t need, just to make sure your discretionary spending is at the right level.
what do you do with your savings?
The key point is don’t make people feel bad about wasting your money. To point out areas where you can cut spending with little impact on your lifestyle. Doing so will free up an amazing amount of cash that can be used in more constructive ways, such as saving for retirement, opening a brokerage account, paying off debt, or other ways to improve your finances and quality of life. There is a possibility.
WARNING: Currently the highest confirmed cashback card is 0% APR through 2024
Using the wrong credit or debit card can cost you a lot of money. Our experts love this top pick with its 0% introductory annual interest rate until 2024, insane cashback percentages of up to 5%, and for some reason all with no annual fee.
In fact, this card is so good that even professionals use it personally. Click here to read the full review for free and apply in just 2 minutes.
Read free reviews