If you asked the average person, many would tell you that they’re pretty good at managing their finances, and it would be true in many cases. But there are also cases where you might think that you’re making sound purchasing decisions or investments when you actually might be wasting a lot of money. Make too many mistakes, and that’s thousands of dollars every year that could end up going down the drain. This is why you need to reassess your finances and your habits and see where you could improve. Let’s take a look at a few ways that you could be wasting money without realizing it.
Your Money is in a Savings Account
If you think the best way to ‘invest’ your money is to have it in your savings account, know that you are effectively getting poorer by the day. This is because the inflation rate will usually always be higher than the interest rate you will get on your deposits. This also means that your purchasing power is shrinking every year.
Instead, we would suggest you start looking at the power of compound interest and use investment tools. There are many user-friendly tools that you can use today to safely invest your money without having to spend on a financial advisor.
You have robo advisors that will allow you to invest in a diversified portfolio based on your investment goals and philosophy. You can go with a low-risk/low-return strategy or be more aggressive. You can also start with a more aggressive strategy when you’re younger, and go for safer investments to guarantee your nest egg as you get older.
You’re Driving a Car
If you live alone in the city, there’s a strong chance that you don’t need a car. You have the underground and the bus system along with tons of other self-service options. Even if you own a car, there is no reason to use it all the time. Using a bicycle instead of your car to run errands or buy groceries could allow you to save a lot of money on fuel.
You Don’t Have a Cash Back Credit Card
If you regularly use your credit card and you don’t have one that will give you cashback on your purchases, you are making a big mistake. There is no reason for you to have a regular credit card when you have cards out there that will not only pay you back, but give you tons of additional perks as well.
Some will give you things like travel miles, but also discounts on nights out at the restaurant, cinema, or store discounts. Make sure that you look at your spending habits and see which card would give you the best benefits based on that.
You’re Too Loyal to Your Providers
A lot of people sadly think that service providers will reward them for their loyalty. In reality, most service providers are more worried about getting new clients than keeping their current ones. This is why you need to take advantage of the competition and look at whether you can get a better deal somewhere else.
You could save a lot of money on energy by looking at comparison sites, for instance. Many will allow you to look at deals from different providers and switch right on the spot. The same goes for insurance providers. This is why you need to look at as many options as you can and use that as leverage to negotiate a new deal with your current provider. If they refuse to meet you halfway, you’ll know that you always have a plan B.
You’re Making Bad Purchasing Decisions
Sometimes, people simply make bad purchasing decisions. A lot of them surround food. They will buy prepared foods they could easily make on their own, for instance, or spend way too much money on takeout. Even if you get a great deal, takeout will usually always cost more than if you made it at home. And you would be surprised at how close to the real deal homemade meals can be – they’re even better sometimes.
If you want to learn how to make better choices, check out these tips for frugal living by Tally. They have a few frugal living tips that you can use when going to the mall or when buying groceries. They also have a few ways that you can change your daily habits to save more money.
You’re Buying Too Many Things New
You’d be surprised at some of the gems you could find on the used market if you simply took the time to look. Why buy things like kitchen equipment or power tools when you can find perfectly good alternatives on a classified site?
If you don’t have any issues with it, you can buy things like furniture or clothing as well. Thrifting is a great way to save on clothes for the whole family, and you shouldn’t feel bad about it. A lot of the things you’ll find at a thrift shop will be as good as new. You could even find high-end brand clothing in some cases, so don’t hesitate to visit one or a few thrift shops in your area and see what they have to offer.
Another thing you should never buy new is a car. Even buying a 1-year-old car to curb some of that initial depreciation is not the best decision. Instead, you should try to get a car that is around 3 to 5 years old. This way, you will be right in that sweet spot where depreciation is slowing down and will get a vehicle that is still under warranty.
You’re Not Buying in Bulk
Prices on bulk items will usually be lower than if you buy pre-packaged goods. So, if you have somewhere where you can buy things in bulk, like grains, spices, or candy, for instance, take advantage of it. Try to go for bigger cuts of meat as well. You could even consider going to the butcher and asking for prime cuts. You could then portion them and freeze some for later.
You’re Not Enrolled in Loyalty Programs
Loyalty programs are not a waste of time and you should take advantage of any that you come across. Some will result in more spam in your inbox, but some retailers like to pamper their club members. Some will offer significant discounts, but also flash deals and sales exclusively for people on their list. So, if you get a chance, look at some of the places you go to and ask about their programs. Also, look at competitors and consider switching if you see a great program somewhere.
You’re Not Using Coupon Apps
If you don’t have a coupon app installed on your web browser and all your devices through which you shop, install one right now. Apps like the Honey app will automatically look for the best coupons for virtually any purchase you want to make. They also make sure that the deals are valid so you don’t waste your time.
These are some of the most common ways people waste money every day. If you’re having a hard time with your finances, changing these habits could be all that it takes to give you room to breathe.