5 Ways Americans Waste Money Without Realizing It

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Life is busy and it is easy to ignore the small amounts of money that fall from our pockets.


Key points

  • It’s easy to overspend on everyday items that we really need.
  • Take a look at your expenses for things like clothes and food to see if you’re overspending.

We are a nation of consumers. If we have money, we spend it. Unfortunately, many of us have a habit of spending money on things we don’t need. The problem is that we need clothes, insurance, food and shelter. And because we need these things, it’s easy to overspend. The trick is to pay for what we need without going overboard.

Here are five things Americans tend to waste money on and a few places you might be able to cut your budget.

1. Fashion

According to a recent survey by the United States Bureau of Labor Statistics, women and girls spend an average of $545 on clothing per year. Men and boys spend around $326. However, these are averages, which means that some people spend less and others spend more. And those who spend much more often run after the latest fashions.

If you are someone who jumps on the latest fashion trend, you may be wasting money. That’s because really hot trends don’t last long, and just when something goes out of fashion, you find yourself buying the latest trend.

A better bet for most of us is to buy classic pieces that won’t look “so 2022” in 2023.

2. Insurance

Insurance is essential to our financial health. Whether it’s home, life or auto insurance, a good policy can be all that prevents financial ruin. Yet it is possible to overdo it. Here are some examples where policyholders might be able to reduce.

Mortgage life insurance

It’s less popular than before, but some people take out a policy that promises to pay off their mortgage in the event of death. It’s almost always a waste of money. Let’s say you buy a house with a balance of $300,000. The cost of a mortgage life insurance policy worth $300,000 is usually much higher than the cost of a term life insurance policy with the same death benefit.

Collision insurance

If you drive an old car with a low Blue Book value, paying for collision coverage may not make sense. Although drivers still need liability coverage (to pay for damages they may cause), you can ask your insurance agent how much you’re likely to receive if your car is totaled. If the amount is tied to the value of the vehicle, you may find that paying for collision coverage isn’t worth it.

Rental car coverage

It may be beneficial to review your auto insurance before purchasing rental car coverage. Often auto insurance on personal vehicles also covers rentals.

Identity theft coverage

Check your credit cards to see if any offer free identity theft coverage. If so, you may not need a separate font. The same applies if you are tempted to take out travel insurance. Many credit cards cover things like lost luggage and trip cancellation. Before paying extra, make sure you don’t already have the coverage you need.

3. Grocery

It’s easy to overestimate how much food we need to buy. According to Feeding America, nearly 40% of all food in the United States is wasted as Americans throw away an estimated $408 billion. Consider this: even if you throw away “only” $10 worth of groceries each week, that’s $520 a year. Buying only the food you think you’re eating could leave you with an extra $520 to save or invest.

4. Memberships and Subscriptions

It’s easy to tell ourselves that someday we’ll go back to the gym, that we’ll need membership in the wine club we signed up for in Napa Valley, or that we can’t live without all the streaming channels. available. To see if you can save money, make a list of all your current memberships and subscriptions. Then, go through them one by one to determine if they still have value for you and cancel those that you can do without.

5. Houses

As the home buying frenzy of the past two years illustrates, some people are willing to go over their housing budget to get into a home. While it’s tempting to buy a house that’s bigger than we need, it’s easy to get in over our heads. In addition to a mortgage, taxes, and home insurance, buying too much home means paying more for things like utilities and repairs. It can also mean higher property taxes and homeowners association fees.

Think carefully about how you plan to use a home and how much space you need to be comfortable. For example, if you share 3,500 square feet with a partner, but both of you usually hang out in the same room, you may have more home than you need.

American author Robert Collier once wrote something like this: “Success is the sum of many little things done right”. And one of the little things we can all do to manage our personal finances is waste less.

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