All of us have spending leaks. We’re spending money on things we shouldn’t. How can we stop wasting money? Read on!
We’re getting back to basics. While you were all busy investing in real estate and monitoring your portfolios, you’ve been steadily wasting money. We’re all guilty of it, but from time to time we need to go back to personal finance 101 and take a hard look at how much we are spending daily.
1. Spend Less Money and Take Inventory
How many transactions are charged to your credit card that you forgot about or know about and don’t use but don’t bother canceling? When it’s $8 a month for Netflix (or streaming service of choice) that you don’t watch and $35 a month there for a gym membership you don’t use, it starts to add up.
Sit down and go through your credit card transactions. Stop those subscription expenses that you don’t use. When you don’t even swipe your card for transactions like those, you don’t realize how much money you’re wasting.
Little Money Wasters
And when you hand over your card for little things like coffee or bodega bacon, egg, and cheese, at that moment, you don’t feel like you are losing anything during that transaction. You’re just pulling money out of your checking account you don’t see.
Do you really enjoy that coffee each morning or is it just part of your routine on your way to work? If you sit down and drink your coffee and read the paper, fair enough. That is enjoyable.
But if you just grab it after you leave home (where there is coffee) and before you get to the office (where there is coffee), you’re wasting money. It’s just a habit. A habit you are wasting money on with no real return.
Maybe you meet friends every week for trivia night or board games. This is something you don’t have to spend money on; it’s not a necessity. But it is enjoyable, probably more enjoyable than your coffee on the way to work.
Or maybe you enjoy them both. But nearly all of us have limited resources and only so much disposable income. You will sometimes have to choose between two things you enjoy or start thinking about how you can earn extra money.
2. Track Expenses As They Happen
Because spending these relatively small amounts of money doesn’t feel like spending money, you have to make it more painful. Every time you spend money, write it down as it happens in a little notebook or log it into an app like Spending Tracker (for iOS) or Expense Manager (for Android).
If you can’t manage that, use the boot camp of budgeting systems, the envelope method. It’s strict, but it works. You make an envelope for each of your non-fixed expenses; things like gas, groceries, clothes, entertainment, etc., and budget a certain amount of money for each envelope.
When an envelope is empty, you have no more money to spend in that category until the following week or month. No credit or debit card to bail you out, you leave those at home until you are disciplined enough to make the envelope method work sans envelopes.
3. Optimize Your Living Situation
There is one sure way to stop wasting money: Get a cheaper living situation.
That might mean moving home with mom and dad for a time, getting a roommate, moving to a cheaper apartment or home, or moving to a location with a lower cost of living than where you are now.
The personal finance rule of thumb is to spend no more than one-third of your income on rent. LMM thinks that should be no more than a quarter.
We live in too much house. The bigger your house, the more stuff you buy to fill it, the more it costs to heat and cool (a larger house means a higher utility bill!), the more time it takes to clean and maintain it. You don’t need so much house.
You also don’t need to live in the expensive hipster neighborhood. You’re not a hipster; you’re not a BoBo, you are not a Shoreditch true believer. You don’t need to live within walking distance of the coffee shop that sells the cat poo beans coffee. You can drink Cafe Bustelo like the rest of us.
4. Find A Cheap Cell Phone Plan
Don’t pay full price for a cell phone provider when there are less-expensive alternatives. Think about getting a prepaid plan with Republic Wireless, non-prepaid plans with U.S. Cellular, or pay-as-you-go plans with T-Mobile.
Take inventory of exactly what you’re using your cell phone for and adjust your plan to reflect it.
5. Optimize Your Time
Do you go to the grocery store without a list and then have to go back because you forgot a key ingredient? Do you get home from the second grocery trip and realize that you were supposed to pick up the dry cleaning from the place that is just across the street from the grocery store?
This all comes down to poor planning. You’re wasting money at the gas station, and it’s costing you time. Keep a list of this kind of stuff, what groceries you need and what errands you need to do. This way you can coordinate things and not have to backtrack all over town.
6. Bring a List to the Grocery Store
Food waste in America is high. Nearly half of it gets thrown away because we don’t prep. If you can read, you can cook. If you can read and cook, you can use meal planning and prep to save time, money, and improve your health and weight if that is something you need to do.
Save money with meal planning and base your menu for the week on two things; what you already have in the house, particularly things that need to be used before they go bad and what is on sale at your supermarket.
Meal prep can mean doing things like chopping all the vegetables you plan to use ahead of time, so when it’s time to make dinner, they are ready to go. And chopping really is the part of cooking that is most time-consuming.
If you had your veggies and meat pre-cut, you could have a good stir-fry in about 15 minutes which is less time than it probably takes you to drive to a restaurant and back.
Meal prepping can also mean cooking big batches of things that re-heat well like lasagne, chili, soups, and stews and then eating from them for a few days. You can also freeze them if you don’t like to eat things more than one day in a row.
You are also allowed to cheat.
Buying pre-chopped veg is not as cheap as doing it yourself, but it is still cheaper than going out.Tweet This
I like to chop vegetables because it’s relaxing, but I’m not going to save a few cents by shredding big blocks of cheese when I can just buy it pre-shredded. You can make similar compromises if you save more money than you are spending.
If you have no idea where to start, check out Budget Bytes. Her recipes are tasty, reasonably healthy, inexpensive, and easy to follow. If you really want to get into meal prep, type it into Pinterest. There are about a million pages dedicated to it.
If the mess is what puts you off cooking, you’re doing it wrong. The kitchen shouldn’t look like a bomb went off. Clean as you go. Don’t use a different utensil, pot, pan, or bowl for everything. The spoon you used to stir a dish on the stove can be the same spoon you use to dish it up at the table.
7. Buy Quality Goods
This is from a Terry Pratchett novel. A character, Sam Vimes, notices that poor people are wasting money buying cheap boots that have to be replaced more often than the more expensive boots rich people buy.
In the end, poor people spend more money on boots than rich people because they can’t afford to buy boots that last.
Those cheap boots are “fast fashion,” items sold by H&M or Old Navy. It’s made poorly. I can spot polyester at 100 paces. You don’t have to buy a couture to buy quality.
There is a middle ground. If you are lucky enough to live near a Uniqlo, check them out. They have great, inexpensive, well made, natural fiber basics like t-shirts, dress shirts, and khakis.
Buy quality jeans. Most of us wear them more than any other piece of clothing and are rougher on them than we are with most other clothes. Don’t buy cheap shoes. They are bad for your feet and back, especially cheap running shoes.
You should spend the most on the things you will wear the most. If you have to wear suits every day, buy good quality suits. If you live in a cold climate, buy a good winter coat. You can cheap out on the stuff you don’t wear so much because it doesn’t get as much wear and tear.
Take proper care of your things too, so they last longer and don’t look shabby. Don’t wear a pair of closed shoes two days in a row, let them air out and put shoe trees in them so they keep their shape.
Treat your leather goods with a conditioning cream, so they don’t dry out. If something gets a stain or tear, attend to it quickly, so it doesn’t set or get bigger.
8. Dinner and Drinks?
This is the socializing default for a lot of people whether they’re meeting friends or going on a date. Everyone likes dinner and drinks but it gets expensive, and it’s not that imaginative.
Here is a whole article on fun, cheap dates and most of them will work for getting together with friends too.
Have a potluck, invite people over to play video games, go on a hike, have a picnic. Food tastes better outside, and people are more relaxed when they are sitting on a blanket in the grass.
9. Rent Before Buying
Do you have ADD when it comes to hobbies? You get interested in something, buy all the gear, and then, just kind of stop doing that hobby. You spent all that money and are stuck storing all that stuff, and you don’t even use it.
Before you waste money on all the kit for your new interest, test it out first. If you want to start skiing, rent or borrow the gear the first few times to see if you really like it. Maybe you’re not good at it, or you realize you hate being out in the cold for so long.
When you find something you like to do, then you can invest in it. And stick with it, even if it’s hard. Part of the pleasure of a hobby is becoming good at it, and that doesn’t happen overnight.
10. Tools You Can Use to Stop Wasting Money
Sometimes we have to buy things. Before you make a sizeable purchase, Google that thing and the words “discount” or “coupon.” You can almost always find a way to save a little money.
Maybe Home Depot is giving 10% off the washing machine you need. Or maybe Groupon is selling Starbucks gift cards for less than face value.
You can use sites like ebates, which is a shopping portal offering cashback and discounts for more than 2,000 retailers. Check out the best time of the year to buy various things. Big-ticket items like electronics, furniture, and appliances go on sale at certain times of the year.
These little amounts we mindlessly spend really do add up. The $20 you spend on coffee each week and the $60 of food you throw away in a month is all money that you could be investing or at least getting some enjoyment from.
Plug your spending leaks, break your mindless money habits and stop wasting money.
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