Before you buy another latte or go out to dinner, you need to know this: the average American has less than $1,000 in savings.
That's a scary statistic to me, because if you think about it, 69% of Americans can't afford to pay a large medical bill or big car repair or save up to buy a house.
I don't know about you, but that makes me wonder what people are spending most of their money on.
To help understand this, I sat down and took a deep look at our own spending habits to help get a better sense of where we could be saving more money.
Here's what I discovered: it's obscenely easy to overspend in certain areas of your life. And it can happen in little bits at a time – so little that you don't notice it until you take a look at the big picture of your spending habits.
While it may sound obvious to reduce your daily expenses, more often than not, it's these small daily splurges that are total and complete budget killers.
Aren't you tired of watching your money just flow down the drain? I know I was before I sat down and did thie eval!
Today I'm going to show you what I learned – the ten daily expenses that end up costing A LOT of money throughout the course of a year.
How to Stop Overspending By Ending The Money Drain
We've all got certain things in our lives that we're willing to spend (too much) money on. Books, movies, and food treats are my weaknesses. For example, I know that I can borrow books at the library for free but instead often buy them so that I have longer to read them and can earmark the pages (sounds lame, but that's what I tell myself).
However, when money is tight (my husband works on commission, so it is often feast or famine in our house), reining in our spending in these areas makes all the difference in the world.
Here are some budget killers that may be draining your monthly budget (and your ability to save).
According to Bankrate.com, buying coffee is the number one money drain, with Americans spending about $350 a year on coffee. If you frequent Starbucks, I think this estimate is very conservative – making coffee one of the most sneaky budget killers.
I'm not advocating that you give up coffee entirely – maybe brew it at home instead of buying it at a coffee shop. You'll save more than you think.
The average price for a pack of cigarettes in the United States is roughly around $6. A pack day can cost you about $2,190 a year. If you stop smoking (not saying it'll be easy), it'll help you avoid overspending AND help your health.
Drink prices vary based on your location. However, the average cost of one beer is $5 plus tip. According to the Wall Street Journal, the average American spends approximately $1,000 on alcohol. To put some additional perspective on this, if you buy just one drink a day, you'll be spending roughly $2,200 per year. Plenty of people spend quite a bit more — many between $3,000 and $10,000 per year just on alcohol.
4. Bottled Water
A bottle of water will cost you $1.50 on average. Americans spend on average about $1,200 per person on bottled water. Save yourself a huge amount of money (and help the environment) by buying a reusable stainless steel water bottle and filling it up multiple times a day with tap or filtered water.
Nothing is more relaxing than a leisurely manicure or pedicure. But, these indulgences are not economically feasible if you do them frequently. The average cost for a manicure is $20 while the average pedicure costs approximately $32. The average woman who gets these done every 2 weeks would spend around $1,300 a year.
6. Car washes
The average cost for basic auto detailing is about $58 while the average car wash costs $10. These costs add up quickly if you do it every two months – costing you about $400 a year.
7. Buying Your Lunch Everyday
I get it. Mornings are hard and getting out the door with everything in town (including a packed lunch) can be nearly impossible. But, if you buy your lunch every day, you can do some serious damage to your monthly budget. For example, spending $10 a day for lunch will cost you about $2,500 a year.
8. Vending Machine Snacks
The average vending machine snack is about $1.50. Buying a snack a day will cost you $375 per year.
9. Interest Charges on Credit Card Bills
The median credit card debt for Americans is $6,850. If you make the minimum payment each month it will cost you $1,100 in interest each year. If you can't pay off the balance of your credit card, see if you can negotiate your interest rate lower or transfer your balance to a new card with a lower rate. Getting these costs down helps stop the money drain.
10. Unused Memberships
A gym membership, that goes unused, can cost approximately $40 a month. Over the course of a year, that adds up to $480 in 12 months. Either use the membership or cancel it to save your self hundreds.
11. Dining out often
Eating out is one of the most deceptive ways to bleed your wallet, even though it seems obvious. Forget about your budget if you spend hundreds of dollars at the grocery store each month and find yourself eating out more than you actually cook.
13. Evaluate Regular Transactions
One way to save bucket loads of time is to automate certain expenses so you don't have to spend time paying them each month.
Make a list of transactions that regularly happen in your bank account. Include things like magazine subscriptions, gym memberships, internet, cable TV, cell phone plan, or other stuff that you are paying for on a regular basis.
Once you make your list, take a good hard look at it. You're looking for these types of expenses:
- Things you are paying for each month but not using (CANCEL THESE)
- Expenses that vary or could be negotiated down (SHOP AROUND FOR BETTER DEALS ON THESE – things like home insurance, car insurance, healthcare insurance, credit card interest rates, housing expenses -interest rates, rent or mortgage payments, etc, – cable TV, etc.)
Avoid Overspending: Get Rid of These Monthly Expenses Causing Your Money Drain
There ya go – 13 expenses will drain your budget dry every month.
Of course, the 13 listed drains are not the only potential serious offenders. It's easy to spend more on basics like food, clothing, and shelter than you have to, and many entertainment activities and hobbies also cost a bundle.
I hope you were able to find at least one or two budget killers on this list that you can modify or eliminate all together to help you avoid overspending your budget this month (and every month).
Bonus: If you're diligent and cut back on unnecessary extras (such as grabbing lunch out every weekday) and maybe even participate in a No Spend Challenge, you'll be able to contribute more money to your savings account than you expected.
Where do you overspend regularly? Fess up your money drain items in the comments below!
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