Who doesn’t want to spend money wisely in order to save more? That’s precisely why you are here right? To know how to avoid bad money spending habits. Unfortunately, we often get slipped into the dig of overspending – not just overspending but for no useful purposes.
Just think about that coffee that you buy every day from a fancy coffee shop (you exactly know what we are talking about). And what about those clothes that you bought but never wore? The list of bad habits regarding our ways of spending is actually very long. A study suggests that, on average, Americans waste 40% of food that they bought! That’s huge, right!
Let’s admit that we all have been through overspending money at some point of our lives. Whether it was at the grocery store, or at the mall stacking up your wardrobe with unnecessary clothes. These are not just bad habits. They can critically affect your financial position. Think about the cost of these habits on your budget! That’s scary. Here’s a list of 5 bad habits you should get rid of for saving money.
What does it mean to spend money wisely?
If we have to explain the meaning of spending money wisely, consider that it’s spending in a way of getting the most value for your money regarding things that you really need. Obviously we all have different needs. This varies from each person. But, one thing is for sure, you will be able to save more and get your financial freedom by making a habit of spending wisely.
We do not mean to cut off your spendings on necessary or even semi-necessary things. Our goal is to help you live an economical lifestyle, having met all your financial goals. It will surely take you on the path of saving more money for your bigger dreams. What do you need to do? Only make adjustments regarding your spending habits, and you are all set!
How to manage money wisely by watching these habits
Let’s be honest, we are all easily tempted to spend money. The worst thing about it is that we don’t even realize that we become overspenders. But don’t worry.Just take a look at these 7 habits.
1. Eating Out Every Day Of The Week
Just think of how many times did you ordered food from outside in the past two weeks? If the answer is more than often, then unluckily, you are in the bad habit of overspending on food. Just do some basic maths.
Just suppose that an average lunch costs you $12, and on average, you order food 5 times a week from outside. Multiply one lunch cost with five days a week for a year. The total might surprise you. Around $3100 in a year on ordering food!
How to spend wisely?
Well, my wise might not be yours! But as a standard, we can suggest cutting back the numbers of time you order food- it might be by one-half or one-third. In this way, you can have a good amount of extra cash in hand. With that cash, you can just buy some nicer items in your grocery store.
Preparing your own meal is actually even better from a health perspective. You know everything that’s going into your meal. So, the crux is that you can spend wisely for more savings and better health.
2. Buying Coffee Every Single Day
We could have added this to overspending on food, but you know the right reasons for not doing so. Most of us can’t open our eyes without a cup of coffee, and it works as fuel for our bodies. More surprising is that an American consumes 3 cups of coffee on average in a day. And it can be more if you are a coffee lover.
Let’s do some maths. Imagine if you drink only Starbucks coffees. Three times a day means around $10 everyday. This makes around $3650 a year. OK this might be a extreme. But think about just a single cup every day from Starbucks or Dunkin Donuts. Even that will cost you around $1460 per year. This is the average cost of 2 round trip flight tickets to Europe. Just saying…
How to spend wisely?
By the maths we did, you must be sure that you are overspending on coffee if you have this habit. On average, you can afford a good coffee maker in the price range of $100-$300. The choice of getting yourself a coffee maker at home is then obvious if you are looking to reduce unnecessary spending. You can save so much money by just buying your own coffee maker at home. It will cost you few cents as compared to an average of $4 per day.
3. Paying ATM Fees
There are few habits that we even don’t even realize how much they impact our finances. Did you ever withdraw cash from an ATM ? Did you realize that the fees were crazy expensive? Some of you might just think “no worries, it’s just 3$”.
That sounds right when you have absolutely no other choice. But what if you often widthdraw money from an Out-of-Network ATM? Let’s say 4 to 5 times in a month. If so, the annual ATM fee you will be paying is around $180-$200.
Couldn’t you make a better use of that $200? You could have added it to your emergency fund, bought something you had been longing for, or even you could have added to your savings for vacations.
How to spend wisely?
Well, luckily, you have enough options to avoid this bad habit of overspending your money on the ATM fees! You can open a checking account with your bank having no fees on ATM transactions irrespective of the fact if you use in-network or out-of-network ATM. Or you can go with a bank that refunds the ATM fees charged at out-of-network ATMs.
The second option is another good habit that can help you a lot in managing your finances. Make a monthly budget. You will have an estimate of your monthly living expenses and weekly expenses too. In this way, you can pull out money from your in-network ATM once a week with the right estimation.
4. Paying Late Fees
Are you bad at remembering due dates? If the answer is yes, it is highly probable that most of the time you have to pay a fees for late payment bills! We cannot put it in the bucket of bad habits as nobody wants to be late on bills. However, if you are among those who are often late, it can be an additional burden on your finances. Because the late fee is unnecessarily high and it can cause much trouble for you and your financial budget.
You will come across paying an average late fee of around 25 dollars per month. And if you are a consistently late payer, it can cost you around $300 a year! Scary enough!
How to spend wisely?
The best way to be on time is to have memos on your phone and mailbox. Set reminders on your phone for due dates of bills. Budgeting is again going to be your savior for avoiding this late payment fee. You would have an estimation of the upcoming bills in advance. This will also help you to identify bills that you are paying for things that you realize are not necessary.
There is another way of avoiding late fees. You can make adjustments with your service providers for making your bills due around the dates when you get paid. It will help you keeping track and paying as soon as you get your paycheque.
5. Buying Clothes, You Don’t Wear
How are many clothes do you have in your closet that still have their brand tags on it? And how many clothes did you wear only once or maybe twice, and never wore again ? If you find out the number is high, then you clearly have the bad habit of getting greedy when it comes to purchasing clothes.
On average, if you are spending $200 per month, it means $2400 in a year, that could have been invested way better.
How to spend wisely?
Make out some time to clean up your wardrobe before filling it up with newly shopped clothes. You can simply donate or sell the items you don’t wear to get some additional cash on hand. Once you have got rid of the unnecessary, make a list of the needed items so your next shopping session will be much easier.
Making a budget is actually always a good idea. This helps you to keep track of your expenses. This apply to anything regarding your finance. Including your wardrobe expenses. We’re not telling you to stop rewarding yourself buying nice dresses and shoes. All we aim for is to help you make better choices when it comes to reach your financial goals.
6. Shopping When You’re Upset or Bored
If you the type of person who goes out window shopping every time you are stressed or bored, well it’s time to reconsider! This practice has a name. We call it Shopping Therapy. This gives you temporary relief from any stress or boredom. It keeps you away from thinking about real problems or concerns you might experience at that time, which is itself a problem that you can’t ignore. It can really affect your financial goals. So let’s talk about the remedy.
How to spend money wisely?
Well, shopping therapy is real, but you can keep yourself from overspending by making a spending journal. Log in every transaction or shopped item and the feelings associated with that particular purchase. Next time you will be better able to make a decision of buying anything or not. Try to be honest with yourself and write down how your purchase made you feel. This will highly help you to reconsider your next purchases.
7. Not Having A Monthly Budget
If a budget can be your savior in almost all difficult situations regarding your finances, not having a budget can prove to be a disaster too. You might end up with piles of debt by spending more than what you have earned. And trust me, it is so easy to be financially doomed if you are not looking after what’s coming in and what’s going out.
How to spend money wisely?
You might consider having a budget sheet where you track all your expenses, incomes, emergency funds requirements. Each and every little detail will help you to make better decisions. When you keep track of your incoming and outgoing of finance, you will be well aware of what to spend and where. There is no standard budgeting method because your financial needs are very personal to each and everyone. Just figure out the budgeting method that suits your financial needs and stick to it.
Spend And Manage Your Money Wisely
Your financial freedom and goals are just a few steps away. All you have to do is learn how to manage your finances and spend money wisely. Budgeting, budgeting, budgeting –We have emphasized it because it is your key to better manage your money and achieve higher financial goals. Create your plan and get ready to change your bad habits of spending into wise decision about finances.
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