- Even the most budget-conscious people can be prone to wasting money.
- If you take hot showers, buy pre-cut veggies, clip coupons too much, or own a car, you might be costing yourself in the long run.
- Here are 11 ways you’re throwing money away without noticing.
- Visit Business Insider’s homepage for more stories.
Even the most budget-conscious people can unknowingly spend too much money.
Many personal finance experts advise ways on how to save as much as possible, but all of us are prone to being “bad with money” from time to time.
“Worrying about waste is a poor use of your mental resources,” Ramit Sethi, best-selling author and CEO, wrote to Business Insider. “The truth is that you will waste some of your money.”
If you’re still worried about trimming your budget, there are some sneaky ways many of us can be wasting our money or spending too frivolously. From over -clipping coupons to taking hot showers, here are 11 ways you’re wasting your money without noticing.
You never check how much you’re spending.
One of the biggest mistakes people make with money is not knowing where it goes, says best-selling author and personal finance expert Ramit Sethi.
“How many times have you opened your bills, winced, then shrugged and said, ‘I guess I spent that much?’ Sethi wrote on his website, I Will Teach You to Be Rich.
To stop being caught off-guard by where your money goes, Sethi recommends being more conscious about your spending. Sethi suggests spending 50% of your income on home and groceries, 5% on investments, and the rest on savings and fun.
Follow Your Money Savings for more detailed tips on how to budget.
Your rent costs more than a fourth of your monthly paycheck.
Housing accounts for the bulk of Americans’ budget, taking an average 37% out of their take-home pay.
Cutting down on your housing costs can lead to far more significant savings than if you were to stop buying coffee and avocados, says Business Insider writer and certified financial planner Lauren Lyons Cole. Cole suggests looking for housing that costs 25% or less after your post-tax income, and use the cash you saved toward your retirement accounts.
“The best financial move you can make is to literally move to a less expensive home,” Lyons said. “Once you do, you can celebrate at your local coffee shop.”
Your monthly car payment digs into your savings.
After housing, transportation is typically a household’s second-largest cost, according to NerdWallet. If you can’t figure out where your money is going, look in your driveway.
Americans spend an average of $725 a month (or $8,700 a year) on a typical midsize sedan, and the cost of insurance could be even higher if you have bad credit. Many people overspend on cars to the point where they can’t pay down other debt or save for retirement, says certified financial coach Shirley Benning.
“My clients have incomes that range from $25,000 to $225,000, and they all have the same problem,” Benning told NerdWallet. “Their eyes are always bigger than their stomach.”