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I Can’t Believe How Much These Small Purchases Are Costing Me Every Year

I Can’t Believe How Much These Small Purchases Are Costing Me Every Year

Have you ever stopped to add up all of the tiny, seemingly inconsequential expenses that we accumulate daily, weekly, or monthly? A few dollars here, a few dollars there add up to big bucks at the end of the year. You will be shocked at how much those unnecessary expenditures are leaching out of your wallet.

1. Make mine a grande.

Your Starbucks habit may be costing you big time. I paid $4.59 for my last Grande latte (Cinnamon Dolce is my favorite). At that price, five days a week, you’d be spending nearly $100 per month, or $1193.40 per year at Starbucks. And that’s just the coffee; throw in a muffin a few times per week and you’re looking at $1500 per year.

What this could buy: With that amount of money, you could buy a new laptop or some living room furniture or maybe a cruise for two.

2. Roll that money up and smoke it.

If you’re still one of the smokers among us, you might as well just roll your money up and smoke it. Though the cost of your cigarette habit will vary by location, from around $5 in Kentucky to $14 in New York, any way you look at it, it quickly adds up. With the average smoker in the US consuming just under a pack a day, you’re spending around $50 per week—that’s $2600 per year. Want to kick the habit? Here are some great tips.

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What you could buy: That would pay for a family vacation. Disney anyone? Or maybe you’re more of a big screen with surround sound and gaming type. You could outfit a family room nicely—every year.

3. The salon habit.

Love that straight, smooth look? If you go to your salon for weekly blow out, at an average of $25 a pop, you’re spending $1300 a year. If you’re a Brazilian blow out consumer, those will set you back another $800 a year. Is smooth hair worth that much to you? Maybe. Maybe not.

What you could buy: You could spend that money on a massage every other week instead or some really fabulous outfits or a bunch of great shoes.

4. Watch those pesky bank fees.

Are you still paying a monthly maintenance fee? Better check your statement. There are so many free checking accounts without fees; it’s foolish to pay that $12 per month when you don’t have to. Also, did you know that most banks now charge a “statement fee” to mail your monthly statements? It’s usually only $2 or so, but that adds up. Get it via email and it’s free. How often do you hit the ATM? According to recent statistics, the average ATM user will hit an ATM 8 times a month. If that ATM is not at your personal bank or if you get cash back at the grocery store, you’ll pay an average of $3 per transaction.

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Some banks charge $5–7 for replacement card and shockingly a few banks are now starting to charge for a “human teller” service. Seriously, $8 to deal with a live person. Even without counting the ridiculous human teller fee, you could be paying more than $500 a year in completely avoidable fees.

What you could buy: With that $500, I could buy a gym membership or maybe better a few stocks and a session with a financial planner.

5. Take another look at that cell phone plan.

According to some recent studies, as many as 80% of cell phone users are overpaying on their plans, especially smart phone users. That’s crazy. Check your usage over a few months. You may be able to downgrade your voice minutes, or you may be paying for voice or data overages. Either way, you’ll save money by “right-sizing” your plan.

You may be surprised by how much you can save by getting an unlimited minute plan or by switching carriers. Smartphone users are overpaying an average of $10–20 per month according to the studies, and if you have several smartphones in your household, it’s even more. That’s $200–500 a year.

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What you could buy: That extra $200 could buy a nice shiny new device or something really cool, like an activity tracker or GPS watch.

6. Keep your hands off the merchandise.

According to a Harris Interactive Poll, the average American spends $200 a month on impulse buys, the biggest offenders being clothes and shoes, toys, technology and checkout counter items. These frivolous purchases are most often triggered by sales, discounts, pacifying children’s wants and convenient placement by retailers. If it’s on sale, but you didn’t need it, then did it really save you anything?

Shopping online can help avoid checkout line temptation, but the instant gratification can cost you even more. The lesson? Stick to your list, wait until the next trip, or impose a 24–hour waiting period. Ask yourself if the $2400 a year is truly worth the payoff.

What you could buy: Instead of shoes you don’t need, another cute sweater, yet another device to add to your collection, more toys to clean around or junk food that adds pounds, perhaps you’d rather buy a comfy new mattress, a new kitchen table, or a terrific stereo. Or you could pay off the credit card bill for last year’s impulse buys.

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7. A dollar and a dream.

We are lottery-hungry here in America, more so than any other country in the world. And while the average American spends about $200 a year on lottery tickets, $4 per week, the poorest Americans spend nearly $12 a week, totaling more than $600 yearly. Since your odds of winning the lottery are somewhere between 175,000,000 and 200,000,000 to 1, it really is a terrible waste of money. In fact, your odds of being struck by lightning, having identical quadruplets, or being killed by a flesh eating bacteria are more likely.

What you could buy: While $200 doesn’t buy much, it does buy some dinners out, a designer bag, a new suit, or a great dress.

8. Brown bag it.

A recent survey cited that 70% of American workers go out to lunch at least twice a week and spend an average of $10 a pop, coming in at around $1000 a year. And for those who go out every day, that number comes in at $2600 each year. I don’t know about you, but I’ll be brown bagging it.

What you could buy: With the money you’ll save by packing your lunch, you could buy a brand new refrigerator full of food. You could use the extra money to buy organic or if you prefer to invest it in yourself, take a professional development course or college course.

However your money is leaking out of your wallet each month, you might want to consider how else you could be spending it. At least be conscious of where your money is going. And something else to consider: if you reclaimed even $100 per month and invested it, even conservatively, you would accumulate nearly $40,000 over the next 20 years and that number would double each decade.

Featured photo credit: Money – Savings via flickr.com

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Published on September 17, 2018

How Being Smart With Your Money Leads to Financial Success

How Being Smart With Your Money Leads to Financial Success

Achieving financial success is not something that just happens. Maybe if you win the lottery or something, but for the average person like you or me, it comes from a series of small steps you take over a long period of time.

With each step, you form a new smart money habit. And with each smart money habit, you build towards financial independence.

So what sort of habits can you form to get on that path? Let’s take a look at smart money habits you can start today to get you closer to a financially independent future.

1. Avoid being “penny wise but pound foolish”

It’s tempting to try saving a couple cents here and there when buying small items. However, that’s not where the real money is saved. You’re putting in extra effort for something that doesn’t move the needle.

You get the most bang when you’re able to cut down on your bigger bills. For example, finding a lower interest rate for your mortgage could save you $50+ per month. And cutting your transportation bill by purchasing a cheaper car or taking public transportation can provide large gains as well.

So, look at your recurring expenses such as housing, transportation, and insurance, and see where there’s wiggle room. It’s a much better use of your time than trying to pinch pennies here and there on smaller purchases.

2. When you want something big, wait

Impulsivity can get you in trouble in most aspects of life. Finances are no different.

It’s human nature to see something and want it right then and there. It starts as a kid in the checkout line at the grocery store, and it continues on through adulthood.

We get an idea in our head of something we want, and it’s hard not to go out and get it right then.

A good example is wanting a new car. Perhaps you’ve had your car for several years. It’s crossed the 100k mile mark. Maybe maintenance is due, and you’re annoyed that you need to replace the timing belt or purchase new tires.

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So, you get the itch.

You start digging around online, and you realize you could trade in your current car for something newer and more exciting… all for a few hundred bucks a month. Then you get obsessed.

Here’s where you have to take a step back.

Your newfound obsession is clouding your judgement. Rather than giving into the impulse, wait it out.

Set a timeframe for yourself. Maybe you come back to the decision three months down the road. See if the obsession lasts.

It might, but often, a funny thing happens. Often, you forget about it. And often, you find that the new car wasn’t a need at all.

The impulse faded. And you just saved yourself a ton of money.

3. Live smaller than you can afford

You finally get that big raise. And you want to celebrate – and why not?

You’ve been looking forward to this forever. And after all, it was all due to your hard work.

That’s fine, splurge a little. However, make it a one-time deal and be done.

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Don’t get caught in the trap that just because you’re now making more money, you should spend more.

Too often, people get more money and feel like they that gives them the means to buy a bigger house, a bigger car… you know the drill. Resist.

The fact is that living smaller than what you can afford is one of the fastest ways to build savings.

But if you constantly upgrade as you begin to make more, then you’ll never get ahead. You’ll just build up more debt along the way and have just as little wiggle room as before.

4. Practice smart grocery shopping

Food… it’s one of the biggest portions of any budget. And if you’re not careful, it can be one of the biggest drains on your wallet.

But luckily, there are a few things you can do to ensure that you stay smart with your money when buying groceries.

Create a grocery budget

Set a strict weekly grocery budget. When you know how much you can spend on groceries, you can then plan your weekly menu around it.

Once you know what all you need, you can go shopping and keep a running tally as you shop to ensure you’re on track.

I tend to do this in my head, rounding for each item. However, writing it down as you go would probably work best for most people.

Make a list… and never deviate

Never go to the grocery store without a list. If you go to the store with a ballpark idea in mind, you don’t have a true ide of what you need.

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You’re not well-researched. You don’t know what the sales are. As a result, you’re going to make decisions on the fly.

These impulse decisions will lead to overspending, which will derail your grocery budget.

Eat before going grocery shopping

It’s also important to eat prior to going to the grocery store. Hunger is a powerful force.

If you’re shopping on an empty stomach, everything is going to look good. In particular, you may find a lot of ready-made, processed snacks will look enticing.

After all, you’re hungry now and that food is easily available. So subconsciously, you may lean towards those items.

Unfortunately, not only are those items typically less healthy, but they’re likely more expensive. You pay for convenience.

However, when you eat prior to shopping, then you’ll shop with a clear mind. Your hunger won’t cloud your judgement, influencing you to make poor decisions like a cartoon devil resting on your shoulder whispering in your ear.

This makes it much easier to stick to your grocery plan.

5. Cancel your gym membership

Now that you’re all set on your food, it’s time to get smart about managing your budget in terms of physical fitness. And let’s begin by avoiding the gym. The gym bill, that is.

The average gym membership costs around $60 per month. That’s $720 a year.

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Yet, two out of three gym memberships go unused. That means two-thirds of people who have a gym membership are literally giving away almost a thousand bucks a year. It’s crazy!

I recommend seeking an alternative. One good alternative is to look into fitness streaming services.

Streaming services allow you to stream hundreds of workouts like Insanity and p90x, right in your own home for around $10-20 a month. That’s $40-50 less a month than the average gym membership.

Of course, then there’s the free option. The internet is full of free workouts that you can do on your own with minimal or no equipment.

For example, there’s the Couch to 5K program, that I personally used a decade ago to ease myself from couch potato to running my first 5K race. If I could do it, anyone could.

Then there are free resources like reddit that have limitless information on workouts. The Fitness subreddit has done all the research for you, populating workout tips and detailed workout routines for anyone to use in their wiki.

There are several routines that require no equipment. And you can join in on the subreddit to become part of the community, making it easier for those seeking comraderie and encouragement in their fitness goals. All for free.

It’s baby steps… And baby steps can start now!

I’ve never met anyone that can’t stand to be a bit smarter with their money. And on the flip side, anyone can get smarter with their money. But remember, it doesn’t happen all at once.

Begin by fighting your impulses. Prepare for the week and be smart at the store. And cut monthly expenses like gym memberships that are overpriced and you probably aren’t getting your money’s worth out of anyway.

The devil is in the details. And the details can change your lifestyle and prep you for a financially independent future.

Featured photo credit: Unsplash via unsplash.com

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