In today’s economy, every purchase counts, especially if you’re struggling to make ends meet. Here, we shed light on common expenses that do more harm than good. These expenses might seem trivial initially, but if you continue to make them, you’ll just keep struggling with your finances.
If you’re tired of living on a tight budget, avoid the expenses on our list at all costs. It’s time for a brighter financial future.
1. High-Interest Credit Cards
According to LendingTree, the average US resident carries at least $5,000 in credit card debt. Instead of relying on credit to pay for your expenses, pay for them in cash. Don’t be afraid to close most of your credit cards. Your credit score will drop a little but quickly recover.
The extra perks credit cards offer may not be worth the stress. For example, if you overspend each month on your credit card, pay with cash instead. However, if you can pay your credit card balance in full each month, it may be worth using only one credit card.
2. Gym Memberships
January is typically when most gyms are full of new members. Prioritizing your health is important, but paying $50 or more per month for a gym you rarely go to isn’t.
If your work schedule makes going to the gym challenging, consider buying a home gym for a flat one-time charge instead. And it doesn’t need to cost you an arm and a leg, either. Purchase quality dumbbells like PowerBlock, a quality bench press, resistance bands, a jump rope, and whatever else you need. You’ll be working out for a fraction of the price.
3. Check Cashing Fees
If you’re still paying a percentage of your hard-earned money to cash your checks, you might as well donate this money. If your employer offers direct deposit, use this to have your paycheck deposited directly to your account each pay cycle. However, if you work for a small business, ask if they can pay using Zelle or other similar services.
4. Extended Warranties
If you rarely break your tech, you don’t need an extended warranty. Additionally, a lot of companies offer a one-year warranty on them. Extended warranties are rarely necessary, even for expensive laptops. However, if you want additional protection, check with your credit card provider, as it’s common for large credit card issuers to offer up to two years of additional warranty at no cost to you.
5. Minimum Balance Fees From Banks
Paying $10 or more per month for your checking account may not seem like a lot. However, when you consider that there are plenty of free options, this expense is slowly draining your wallet. Instead, figure out how you can keep your checking account free.
For example, many banks require direct deposit or different types of accounts to waive the fee. If you discover that you can’t meet your bank’s requirements, shop around for banks that offer free checking accounts. A quick Google search will lead you to many options.
6. Overdraft Fees
Unfortunately, the moment your bank account reaches a negative balance, most banks charge you an overdraft fee. Some offer a service to automatically transfer money from other accounts to cover this balance. However, an easy and free option is to ensure you have notification alerts for your checking accounts.
Typically, you’ll get a text message or email notifying you of negative balances. Depending on your bank’s policies, you might avoid penalties if you cover the negative balance within 24 hours.
7. Cable
If you’re paying for cable, you’re most likely doing so because of a sports package or a specific show. However, streaming services are no longer just for the younger crowds. Odds are your favorite show and sports are offered via a streaming option that will beat paying $80 for cable.
8. Eating Out Often
Now that many employees are back in the office, eating out with coworkers is something many enjoy. However, spending $10 daily for lunch adds up. If you can’t pass on lunch with your coworkers, consider bringing your own lunch.
9. Expensive Mobile Phone Plans
If you haven’t shopped around for cell phone plans in over a year, you may be overpaying. Often, cell phone plans go up by a few cents each month so you don’t realize when it adds up. If you’ve been with a cell phone carrier for years, you can use it to your advantage.
For example, call your cell phone provider and ask for a discount. This tactic will be more effective if you do some light research prior. Find competitive cell phone plans and mention this to the customer service rep from your cell phone provider. If done right, you can get your bill reduced by $5 or $15 per month.
10. Mindlessly Buying Groceries
Shopping without a grocery list is the equivalent of shopping without a budget. Without a grocery list, you’ll most likely overspend, and by the time you’re at the cash register, you may feel pressured to keep most items. Consider buying your groceries online and picking them up. This way, you can clearly see what you’re spending before you purchase.
11. Getting the Latest Tech
Many phones, laptops, and other tech claim to be a must-have after each release. Avoid falling into the trap of companies’ good marketing. However, no matter how hard you try, it’s challenging to fight tech that looks better than the one you currently have.
To stay disciplined, keep tabs on your financial goals. That way, each time you’re tempted to purchase the latest tech, you’ll know which goals you’re delaying.
12. Buying the Latest Fashion
What’s the difference between a $10 T-shirt and a $100 one? Likely not much. The quality may vary, but there is a breaking point where you pay more for the brand than quality. Instead, pay more for apparel that will last you a long time.
Apparel made from organic material tends to cost more, but it may be worth it if you can afford it. Ironically, spending money on cheap clothes is more expensive in the long run. If you constantly purchase the latest trends, you’re most likely overspending.
13. Transportation Costs
If you live in places where you pay for tolls, this may be slowly draining your wallet. If it makes sense, consider taking back roads to avoid tolls. That or aim to work from home or drive less over weekends. Additionally, consider improving your driving habits. If you’re constantly rushing, this can cost you more gas and maybe a speeding ticket.
14. Car Loans
Car loans may seem like they’re set in stone, but you have more power than you think. If you’re spending over $500 a month on your car loan, consider lowering this amount as much as possible. You can refinance your loan or try to pay it off faster if you have the cash.
However, as a last resort, consider trading in your car for a more affordable one. This is a tough pill to swallow for most, but it’s an option that can improve your financial situation. If trading your vehicle isn’t cost-effective, make it a priority to pay off your balance as soon as possible.
15. Emergency Medical Expenses
Paying less for your medical insurance may seem smart, but it can cost you more in the future. Evaluate your family’s spending on medical expenses each year and how often you all visit the doctor. Then, opt for a medical plan that properly insures everyone.
16. Keeping up With the Joneses
It’s tempting to purchase a new car when your coworker brags about theirs or to buy new clothes to appear successful to your friends. However, keeping up with the Joneses is a recipe for disaster. Impulse purchases to impress others can actually be a sign of insecurity. You’re better off letting your friend or family boats about their items while you sleep well at night debt-free.
17. Expensive Vacations
Vacations are worth it, especially after a year of hard work. However, without proper budgeting, they can quickly drain your wallet. Consider that you’ll spend a few thousand dollars, on average, to take a family trip for a few days. Vacations are something everyone should get to indulge in, but take the time to plan for them.
18. Expensive Childcare
Finding people we trust to care for our toddlers is challenging. And if this wasn’t enough, it’s also expensive. Prices will vary but expect to pay a few hundred monthly for daycare. Instead, ask family for help if they’re available. Additionally, consider working from home to be able to care for your kids.
There’s no perfect solution for childcare, but it’s worth brainstorming to find the most cost-effective option. Otherwise, you’ll have larger expenses each month.
19. Housing Costs
Like cars, housing costs can drain your wallet each month. One way to lower this cost is to rent out a spare room. For example, if you have a large basement, you can remodel it into a studio with its own door. Additionally, you can refinance your mortgage loan or downgrade to a smaller home. Some of these options won’t be easy, but if you drastically lower your mortgage expense, you could save this extra money to fund your financial goals faster.