Advertising
Advertising

8 Expensive Things You Always Spend On Which Make You Less Rich

8 Expensive Things You Always Spend On Which Make You Less Rich

Our expenses are closely connected to our lifestyle, our habits, and generally our interests. It is also quite common how we tend to justify our expenses, but we can be very judgmental as we watch those around us spend their money. It is perhaps a defensive mechanism we’ve gradually developed, while living in the consumers’ culture.

However, you are not required to give up on buying things, all you need to do is re-evaluate your decisions and approaches. In other words, how to still get what you want, but at the same time preserve your budget. Prudence is a virtue, you should not hesitate to practice, for it will bring a certain dose of stability in your future life.

1. Bottled water

163121577-copy

    Yes, water is one of our essential needs, but we are not obliged to spend money on bottled water. Even though tap water usually contain harmful bacteria, it can be drinkable if you install a water filter. Truth be told, a filter is not that big of an investment, yet it can save a lot of money and it is far more convenient to pour water from the tap.

    Advertising

    A liter of bottled water approximately costs 2$, and let us assume that the natural daily intake of water is around 2,5 or 3 liters. By switching to tap water, you save up to $5 dollars on a daily basis, or $150 per month.

    2. Printer ink cartridges

    Regardless whether you use your printer frequently or not, buying a new cartridge every time your old one is depleted, is an unnecessary expense. Cartridges are designed to be refilled, and you can either have someone else to do it, or you can get your hands dirty and fill them yourself. Either way, you will restore its functionality at only half the price. Moreover, it would be wise to buy a quality printer that uses cheaper ink, if you tend to use your printer regularly.

    A new cartridge can cost between $40 and $60, but it can be even higher. Refilling, on the other hand, is only between $10 and $12, so you save around $30 by opting for a refill.

    3. Cable TV and magazine subscriptions

    cable_tv_tightens
        
      Advertising

      Almost everything you want to read in your magazine is available online for free. As far as cable or satellite TV is concerned, you can stream an incredible number of shows or full length movies on Hulu.com, free of charge. Netflix offers a lot of quality material as well, charges only 9$ a month for these services, which is still cheaper than your cable subscriptions. In other words, any quality TV show you pay over $9, is basically a waste of money.

      4. Books

      It may sound outrageous, how can buying a book be considered as reckless spending. Well, it can. Buying books online, and reading it on an e-reader is a cheaper alternative, borrowing books is another budget friendly option, and a membership in the library is perhaps the best one. Buying a book that you want to read more than once is alright, but let’s face it, we love to show off. We decorate our bookshelves with our favourite chronicles and authors, to the point when it starts to feel shallow.

      The whole point of a book is to provide you with cautionary tales, help you forge some personal wisdom and moral values. If you start to treat it as a personal possession that you use to impress your friends, then you are buying it as a decoration. It is hard to say exactly how much you save by buying books for an e-reader, but you save around 40 to 50% for each book you purchase.

      5. Expensive Branded items

      Advertising

      Main_banner_compass_luxurypromo-1024x768

        Let’s be honest, in the event you have developed a taste for buying globally renowned branded items, then your wallet is in a serious trouble. There is nothing wrong with having your own style, or trying to mimic modern fashion, but paying significantly more, simply because of a particular trade mark is madness. For example, buying an expensive item can sometimes cause more stress than satisfaction. You are more likely to get mugged, so you need to be vigilant all the time; it may not be compatible with all of your dressing combinations.

        A luxurious bag can cost $1000 or even more, but a military messenger bag f.e. will cost between $70-$100. The same applies for other branded items, if they drain your budget, condition yourself to look for cheaper alternatives. Learn to be more creative, don’t try to impress people with brand names – you are spending too much for something that is only a fleeting sensation.

        6. Video games     

        This is the same as with books – you do not need to own the game, you are only enlarging your connection to impress the Internet (the online community). It is alright to consider yourself a proud gamer, however, spending tons of cash just to let it the world know is absurd. Surely, you have friends who are also game enthusiasts – make an agreement with them, who will buy which upcoming game.

        There is no need to spend $40 every time a new game comes on the market. Furthermore, if you play games with monthly subscriptions ($10 – $15 a month), or even worse, freemium games, stop at once. Do not even try to justify the reason why you are playing them, just stop and find a new hobby. If you are able to play it for two or three months, see what it’s is all about and quit. If you can’t show this level of restraint, then you should aks yourself if you might be an addict.

        Advertising

        7. Lottery tickets

        The number of people who play the lottery is ridiculously high. As John Oliver on “Last Week Tonight” said: Planning how you will spend your lottery winnings is an equivalent to planning what to say on your third date with Beyoncé. The only thing your lottery ticket does, is help the rich to get richer. Despite the fact that a single lottery ticket is approximately $3, the amount of money people spend to participate is large, since you usually buy more than one ticket. Instead of buying a ticket, put all that money in a piggy bank, and you are bound to be more satisfied after a couple of months, when you smash it.

        8. Buying new things

        Buying a new cell phone, a new car, a new console etc. the moment it appears on the market is yet another form of irresponsible spending, especially if you already have properly functioning utilities that are former models. Boasting with new items can be fun, but continually doing so is just sad. Why would you work so hard, every day, only to allow yourself to be manipulated by cheap advertising tricks?

        If you think of yourself as a collector or enthusiast, there is no need to buy these items the moment they hit the shelves. If your old iphone is still functioning, you do not need to spend $600 just to buy a new model. The same applies to your car – spending between $6000-$7000 for a new one is losing a fortune for no particular reason.

        More by this author

        Djordje Todorovic

        Blogger, Gamer Extraordinaire

        10 Highly-Desired Skills You Can Acquire By Self-Learning 20 Things Smart People Don’t Do (And What They Do Instead) 5 Tips on How to be a More Responsible Person 7 Essential Tools Every Serious Startup Needs 7 Common Struggles of Minimalist Beginners and How to Overcome Them

        Trending in Money

        1 How to Set Financial Goals and Actually Meet Them 2 25 Killer Sites For Free Online Education 3 10 Recession-Proof Debt Consolidation Tips 4 The Definitive Guide to Get out of Debt Fast (and Forever) 5 25 Easy Tips on How to Save Money Fast

        Read Next

        Advertising
        Advertising
        Advertising

        Last Updated on September 2, 2020

        How to Set Financial Goals and Actually Meet Them

        How to Set Financial Goals and Actually Meet Them

        Personal finances can push anyone to the point of extreme anxiety and worry. Easier said than done, planning finances is not an egg meant for everyone’s basket. That’s why most of us are often living pay check to pay check. But did anyone tell you that it is actually not a tough task to meet your financial goals?

        In this article, we will explore ways to set financial goals and actually meet them with ease.

        4 Steps to Setting Financial Goals

        Though setting financial goals might seem to be a daunting task, if one has the will and clarity of thought, it is rather easy. Try using these steps to get you started.

        1. Be Clear About the Objectives

        Any goal without a clear objective is nothing more than a pipe dream, and this couldn’t be more true for financial matters.

        It is often said that savings is nothing but deferred consumption. Therefore, if you are saving today, then you should be crystal clear about what it’s for. It could be anything, including your child’s education, retirement, marriage, that dream vacation, fancy car, etc.

        Once the objective is clear, put a monetary value to that objective and the time frame. The important point at this step of goal setting is to list all the objectives that you foresee in the future and put a value to each.

        2. Keep Goals Realistic

        It’s good to be an optimistic person but being a Pollyanna is not desirable. Similarly, while it might be a good thing to keep your financial goals a bit aggressive, going beyond what you can realistically achieve will definitely hurt your chances of making meaningful progress.

        It’s important that you keep your goals realistic, as it will help you stay the course and keep you motivated throughout the journey.

        3. Account for Inflation

        Ronald Reagan once said: “Inflation is as violent as a mugger, as frightening as an armed robber and as deadly as a hitman.” This quote sums up what inflation could do your financial goals.

        Therefore, account for inflation[1] whenever you are putting a monetary value to a financial objective that is far into the future.

        For example, if one of your financial goal is your son’s college education, which is 15 years from now, then inflation would increase the monetary burden by more than 50% if inflation is a mere 3%. Always account for this to avoid falling short of your goals.

        Advertising

        4. Short Term Vs Long Term

        Just like every calorie is not the same, the approach to achieving every financial goal will not be the same. It’s important to bifurcate goals into short-term and long-term.

        As a rule of thumb, any financial goal that is due in next 3 years should be termed as a short-term goal. Any longer duration goals are to be classified as long-term goals. This bifurcation of goals into short-term vs long-term will help in choosing the right investment instrument to achieve them.

        By now, you should be ready with your list of financial goals. Now, it’s time to go all out and achieve them.

        How to Achieve Your Financial Goals

        Whenever we talk about chasing any financial goal, it is usually a two-step process:

        • Ensuring healthy savings
        • Making smart investments

        You will need to save enough and invest those savings wisely so that they grow over a period of time to help you achieve goals.

        Ensuring Healthy Savings

        Self-realization is the best form of realization, and unless you decide what your current financial position is, you aren’t heading anywhere.

        This is the focal point from where you start your journey of achieving financial goals.

        1. Track Expenses

        The first and the foremost thing to be done is to track your spending. Use any of the expense tracking mobile apps to record your expenses. Once you start doing it diligently, you will be surprised by how small expenses add up to a sizable amount.

        Also categorize those expenses into different buckets so that you know which bucket is eating most of your pay check. This record keeping will pave the way for cutting down on un-wanted expenses and pumping up your savings rate.

        If you’re not sure where to start when tracking expenses, this article may be able to help.

        2. Pay Yourself First

        Generally, savings come after all the expenses have been taken care of. This is a classic mistake when setting financial goals. We pay ourselves last!

        Advertising

        Ideally, this should be planned upside down. We should be paying ourselves first and then to the world, i.e. we should be taking out the planned saving amount first and manage all the expenses from the rest.

        The best way to actually implement this is to put the savings on automatic mode, i.e. money flowing automatically into different financial instruments (mutual funds, retirement accounts, etc) every month.

        Taking the automatic route will help release some control and compel us to manage what’s left, increasing the savings rate.

        3. Make a Plan and Vow to Stick With It

        Learning to create a budget is the best way to get around the uncertainty that financial plans always pose. Decide in advance how spending has to be organized

        Nowadays, several money management apps can help you do this automatically.

        At first, you may not be able to stick to your plans completely, but don’t let that become a reason why you stop budgeting entirely.

        Make use of technology solutions you like. Explore options and alternatives that let you make use of the available wallet options, and choose the one that suits you the most. In time, you will get accustomed to making use of these solutions.

        You will find that they make it simpler for you to follow your plan, which would have been difficult otherwise.

        4. Make Savings a Habit and Not a Goal

        In the book Nudge, authors Richard Thaler and Cass Sunstein advocate that, in order to achieve any goal, it should be broken down into habits since habits are more intuitive for people to adapt to.

        Make savings a habit rather than a goal. While it might seem to be counterintuitive to many, there are some deft ways of doing it. For example:

        • Always eat out (if at all) during weekdays rather than weekends. Weekends are more expensive.
        • If you are a travel buff, try to travel during off-season. You’ll spend significantly less.
        • If you go shopping, always look out for coupons and see where can you get the best deal.

        The key point is to imbibe the action that results in savings rather than on the savings itself, which is the outcome. Focusing on the outcome will bring out the feeling of sacrifice, which will be harder to sustain over a period of time.

        Advertising

        5. Talk About It

        Sticking to the saving schedule (to achieve financial goals) is not an easy journey. There will be many distractions from those who are not aligned with your mission.

        Therefore, in order to stay the course, surround yourself with people who are also on the same bandwagon. Daily discussions with them will keep you motivated to move forward.

        6. Maintain a Journal

        For some people, writing helps a great deal in making sure that they achieve what they plan.

        If you are one of them, maintain a proper journal, where you write down your goals and also jot down the extent to which you managed to meet them. This will help you in reviewing how far you have come and which goals you have met.

        When you have a written commitment on paper, you are going to feel more energized to follow the plan and stick to it. Moreover, it is going to be a lot easier for you to track your progress.

        Making Smart Investments

        Savings by themselves don’t take anyone too far. However, savings, when invested wisely, can do wonders.

        1. Consult a Financial Advisor

        Investment doesn’t come naturally to most of us, so it’s wise to consult a financial advisor.

        Talk to him/her about your financial goals and savings, and then seek advice for the best investment instruments to achieve your goals.

        2. Choose Your Investment Instrument Wisely

        Though your financial advisor will suggest the best investment instruments, it doesn’t hurt to know a bit about the common ones, like a savings account, Roth IRA, and others.

        Just like “no one is born a criminal,” no investment instrument is bad or good. It is the application of that instrument that makes all the difference[2].

        As a general rule, for all your short-term financial goals, choose an investment instrument that has debt nature, for example fixed deposits, debt mutual funds, etc. The reason for going for debt instruments is that chances of capital loss is less compared to equity instruments.

        Advertising

        3. Compounding Is the Eighth Wonder

        Einstein once remarked about compounding:

        “Compound interest is the eighth wonder of the world. He who understands it, earns it… He who doesn’t… Pays it.”

        Use compound interest when setting financial goals

          Make friends with this wonder kid. The sooner you become friends with it, the quicker you will reach closer to your financial goals.

          Start saving early so that time is on your side to help you bear the fruits of compounding.

          4. Measure, Measure, Measure

          All of us do good when it comes to earning more per month but fail miserably when it comes to measuring the investments and taking stock of how our investments are doing.

          If we don’t measure progress at the right times, we are shooting in the dark. We won’t know if our saving rate is appropriate or not, whether the financial advisor is doing a decent job, or whether we are moving closer to our target.

          Measure everything. If you can’t measure it all yourself, ask your financial advisor to do it for you. But do it!

          The Bottom Line

          Managing your extra money to achieve your short and long-term financial goals

          and live a debt-free life is doable for anyone who is willing to put in the time and effort. Use the tips above to get you started on your path to setting financial goals.

          More Tips on Financial Goals

          Featured photo credit: Micheile Henderson via unsplash.com

          Reference

          Read Next