Unnecessary Wastes Of Money | 15 Biggest

In the first three months of 2019, consumer spending is on pace to exceed $14 Trillion by the end of the year, according to the Bureau of Economics (via TheBalance). In this article, we aim to identify the biggest unnecessary wastes of money within that $14T that we’re all guilty of!

First of, $14 Trillion is $14,000,000,000,000! According to the Bureau of Labor Statistics, the average American’s yearly expenses are over $60,000 (as of 2017)! This includes the following categories – see how much is being spent on each each year in various categories accordance with this BLS report, and keep in mind, this is per American adult:

Category	Spent in 2017	Per Month	Per Week	Per Day
Food*	$7,729	$644	$148	$21
Housing	$19,884	$1,657	$383	$55
Clothes	$1,833	$153	$35	$5
Transportation	$9,576	$798	$184	$26
Healthcare	$4,928	$411	$95	$13
Entertainment	$3,203	$267	$62	$9
TOTAL	$47,153	$3,929	$907	$129

*56% Of Food Spending Is For Food Not Eaten At Home

As you can see, the average American spends quite a bit of money each year. We spend $129 every day just to get out of bed and live an average (spending-wise) life.

Now the biggest question – how much of this do we need? More to the point, how much do we NOT need to spend?

Sticking to the categories above, here are 15 unnecessary wastes of money to avoid in our day-to-day lives:

1. Credit card interest
2. Paying others first (not investing)
3. Traffic violations
4. Trendy, expensive restaurants
5. Alcohol (at a bar)
6. Extra bedrooms (or any extra rooms)
7. Exercise & recreation equipment
8. New gadgets
9. Overestimating how many clothes we need
10. Following the celebs (wardrobe & lifestyle)
11. Buying new cars
12. Having a car payment
13. Gym memberships
14. Cable / subscriptions
15. Too many devices i.e. tablets, computers, TVs

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How Can We Avoid Unnecessary Spending?

Let’s go through the above list of 15 unnecessary wastes of money in greater detail, starting with a few HUGE topics:

Wasting Money On Credit Card Debt

Credit cards do have benefits. Many of the providers offer incentive to spend money using their card: cash back points, airplane miles, etc. In this way, credit cards are actually a smart way to spend money….when you make the full payment every month!

The problems with credit cards arise when you carry a balance. The average credit card provider charges nearly 20% interest! That means for every dollar you still owe to your credit card company, you’ll pay an extra 20 cents on top of it every month. That’s an extra $200 in interest you will pay on a $1,000 balance.

It goes without saying – never carry a credit card balance!

A final thought – this same principal applies to ANY type of loan or financial obligation we enter into that requires we pay interest. Use your best judgement to make sure the loan is worth it.

Traffic Violations Cost A Lot

Have you ever had a moving violation? It’s expensive.

First, the cost of the ticket. This can easily cost several hundred dollars per ticket.

Then, the car insurance aspect. TheZebra has a great breakdown of car insurance premiums after a violation or accident. This table breaks down the average 6-month cost of car insurance in various scenarios.

With no violations, the average yearly cost of car insurance is $1,470. Looking over the different types of violations, you can see how quickly yearly insurance premiums can cost you an extra $1,000 on top of the regular policy cost. The cost will remain higher for several years.

Drive responsibly and you’ll not only keep yourself and others safe, but you’ll save thousands.

Not Taking Advantage Of The Power Of Time (Compound Interest)

The power of time is real. Ever wonder how some people accumulate so much wealth? While there are many ways to do so, there’s one tried and tested method: harnessing the power of compound interest.

This compound interest example from Primerica shows something profound. It compares how much $200 a month over 35 years will be worth at the rate of inflation (around 3%) vs. the value at 6% interest rate, and the latter will be worth an extra $138k (about double). At a 12% interest rate, it is worth $1.3 MILLION, or about 10x that of the inflation rate.

Try out this compound interest calculator to see how much you could make in interest over a certain timeframe! Here’s a hypothetical calculation of interest earned if you start with $1,000 and add $2,400 per year ($200/mo.) into a fund that makes 7% over five years:

If this amount of money was saved, but not invested, it’d be worth $13,000. The amount earned in interest along equals the cost of a family vacation.

Keep in mind, that five years is a short amount of time. If you didn’t touch that $16,170.45, but added nothing more, it’d be worth the figure below in 10 more years:

That amount will nearly double for doing nothing! You could be spending the $200 on other things once you invest that initial $13,000, and let your money ride the wave of compound interest.

While you should certainly have money safe in savings, it makes sense to invest in funds that earn you interest.

Don’t know what to invest in? Here’s a list of investment funds that have outperformed the market by a fair margin.

Spending Too Much At Restaurants

Based on our table above, the average American spends $83 per week on food not eaten at home. Since most work 40 hours per week, that’s over $2 per working hour that the average person spends on food outside of home. In the words of Michael Scott:

If you’ve been to a trendy restaurant lately, you’ll probably agree that $83 gets spent pretty quickly on very little food. A typical brunch with a couple of Mimosas, an appetizer and an entree can easily cost more than $40 per person after tax and tip. Add in an expensive coffee per day and that $83 gets even closer.

Here’s what $40 can get you at the grocery store:

• 48 ounces of salmon (about 16 servings)
• Over 200 bananas
• 20 avocados (despite their steep increase)
• 9 bottles of almond milk (over 50 servings)
• You get the idea…

While this is OK on occasion, it quickly adds up when it becomes a weekly habit.

Wasting Money On Drinks At Bars

This one is big. If you want to have drinks with friends, have a house party. Money spent on bars amounts to thousands per year in some places.

Consider a few of the price comparisons below:

• A rum and soda can easily cost $10 at a bar which will include 1-ounce of rum, whereas a 750ml bottle of rum will cost around $14 in the store. That’s about $0.56 per 1-ounce serving.
• A bottle of beer regularly costs upwards of $5 at a bar or restaurant, sometimes closer to $10. If you buy a 6-pack of good beer from a store, you can expect to pay about $10, or $1.67/bottle. Buying beer by the case (about 24 bottles) brings the cost to just over a dollar per bottle.

Most people go to bars to also be social, but there are many other ways to meet people. Bars know that people will not only spend extra on alcohol for convenience, but also to feel more comfortable or have a better time. As a result, people spend a HUGE amount of money on alcohol at bars.

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Related Articles:

• What Is The Minimalist Lifestyle?
• What Is Hedonic Adaptation And How Can We Avoid It?

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Buying Or Renting Extra Rooms

Here’s a statistic for you: the average American home size has nearly tripled since 1950. With improved building technology and modern conveniences, some of this is to be expected. What’s weird though, is that birth rates are almost 50% less since then. This means, the amount of space the average person has at home now is several times more than it was in 1950.

While there are plenty of statistics that outline changes in home size, whether or not we waste space at home comes down to our own situations. Here are a few rules of thumb to determine if we rent or own too big of a home:

• Have you ever bought furniture just to fill up rooms or space?
• Do you have rooms you rarely use?
• Take the amount of occupied beds in your home and add one to it. For example, a family of four will most likely have three beds in use. That family of four should have a maximum of four bedrooms at home. This assumes they have guests regularly and will use the extra room. If not, forget the 4th bedroom. Do you have more than this?

If you answered yes to one or more of the above, you are most likely paying for extra space.

Exercise & Recreational Equipment Gathering Dust

Have you ever been in full-on ‘motivation mode’ and bought a treadmill, canoe or some other equipment? You’re not alone. I think most of us have been bitten by that bug before – inspiration strikes, a treadmill or other piece of equipment is bought (goodbye, several hundred dollars), we use it diligently for a little bit…until it’s boring. Three years go by and it sits there collecting dust.

Even people who exercise often will eventually get bored – it’s human nature. This is why Craigslist is littered with lightly used exercise equipment in good condition.

Instead of the treadmill, try going running outside – it’s free. Instead of buying a kayak or canoe, rent one a couple of times until you are going regularly.

Spending Too Much On Gadgets

Similar to the exercise section above, we often buy gadgets more often that needed, too. I love the store Brookstone. They have gadgets of every kind – back massagers, cool alarm clocks, fancy toothbrushes, sound systems – the list goes on. Although cool, these items are truly not necessary.

‘As Seen On TV’ are the masters of this. They are great at sales, and know exactly how to frame their pitch to convince you to buy.

The next time you see a gadget to lust over, think twice before you buy. Odds are, we usually don’t need it.

Spending Too Much On Clothes

Here are some mind-blowing stats surrounding how much we spend on clothes – both in terms of dollars spent, as well as time. Among them – 169 hours are spent shopping for clothes every year, nearly $100 Billion are spent each year on jewelry, shoes and watches, and the average American family throws away 65 POUNDS of clothing every year.

For most of us adults, the typical week looks like this:

Monday through Friday, we work for the majority of the day. The rest of the day is spent either in workout clothes, or chill around-the-house clothes.

Saturday and Sunday, we socialize, but also run errands and just hang out at home.

If you take underwear and socks out of the equation, how much do we really need to go to work, hang out afterwards and spend time socializing and exercising? Based on the above, the average person can probably get away with spending a lot less than $1,833 per year on new clothes.

Trying To Live Like Celebrities

With social media, the concept of ‘keeping up with the Joneses’ has taken on a whole new meaning.

Check out this list of social media addiction statistics. Some of the main takeaways include:

• Excess social media usage is linked to depression.
• Many people use social media between 2 and 9 hours per DAY.
• Millions of users are believed to fit the criteria of addiction.

In this process, social media users are inundated with photos of celebrities dressing, spending and living in a certain way. Combine that with ‘YOLO’ culture, and you quickly have millions of people trying to live the way a few thousand do. Keep the following points in mind when observing celebrities on social media:

• They’re often PAID to endorse specific brands, not paying for them.
• We see the best side of them always, and they have the time and money to spend on fitness, hair, makeup, etc.
• They often have millions of dollars and aren’t worried about day to day expenses.
• Many celebrities have gone into big debt, and live beyond their means. Even millions run out eventually.

Buying New Cars

According to CarFax, a new vehicle will lose about 10% of its’ sticker price within 30 days of purchasing it. They might be saying it nicely, too – the car is considered used the moment you sign the papers and drive off.

After 12 months, the vehicle is worth about 20% less than the sticker.

This means a $30,000 vehicle will be worth about $27,000 within a month, and about $24,000 within the year.

Buying the same $30,000 car at one year old will likely save $6,000 off the total purchase price. Is that new car really worth it?

Wasting Money On A Car Payment

Speaking of cars, having a car payment at all can be a waste of money. After all, every month you make a payment, you own a little bit more of the car, but you don’t really own the car until it’s 100% paid off.

By the time we pay the loan off and actually OWN the car, the car is worth a fraction of what we paid. Only then does the car start being cost-effective.

What usually happens next? The cool, new model is out and our friends are getting their new cars. Technology and performance gets better, and our once-new car is not so new anymore. We get tempted into the cycle all over again.

Given that the average payment in America is $530 per month for a new car and $381 for a used car, a twelve-month period without a car payment amounts to several thousand dollars saved per year. Even with repairs on the older vehicle you own, you’re still saving money.

Not Using The Gym Membership

Gym memberships are a great way to stay in shape – if they’re used, of course.

According to this article on Finder, about 50% of gym memberships are used less than twice a week or never at all. Even average gyms can cost upwards of $50 a month, or $600/year. Planet Fitness can be lower, and exclusive health clubs much higher. Whether it be a few hundred or several thousand dollars a year that the gym will cost, ask yourself if it’ll really be worth it.

Plus, exercising outside and doing calisthenics for free can go a long way!

Cancel The Cable & Unused Subscriptions

It can be tempting to pay for cable, sports/movie packages, streaming services or, uh, ‘adult’ websites, but these expenses quickly add up to over $100 per month.

Personally, I almost never watch movies more than occassionally on movie channels. That alone adds up to a couple hundred dollars a year, barely utilized.

Subscription companies are great at pitching their products – they make it sound like you’re getting a great deal considering how much they charge – but the majority of anything you ever pay for in a subscription will go unused.

Consider narrowing down your subscriptions to one, and maximize your use of wi-fi and the internet for other entertainment.

Spending Too Much On Devices

Last but certainly not least on our list of unnecessary wastes of money – devices. Specifically, computerized devices.

Smart phones, tablets, smart TVs and laptops have their unique purposes, but almost never does one need all four. If they do have all four, they probably don’t use them anywhere close to the amount needed to justify the costs.

Sticking with estimated figures, see below (not including costs of phone plans or internet):

• New smartphone: $250 – $1,000+
• Tablet: $250 – $1,000+
• Smart TV: $250 – $2,500+
• Laptop: $250 – $2,000+

To buy one of each, we can expect to spend $1,000 on the low end, and over $6,000 on the high end. Combine these prices with the fact that devices are updated all the time, and everything you bought will seem old before you know it.

Limiting how many devices you buy and the frequency of these purchases can save quite a bit of money!

In Conclusion

Most people struggle to save money and to recognize where they’re overspending. Hopefully this list has illustrated the many ways Americans spend too much, and some easy changes we can make to start saving a lot more money….now.