In this blog, we are going to look at the things we waste our money on … we are going to talk about what these things are and how we should avoid them.
5 Crazy Ways People Waste Money
- Bad habit
- Paying high-interest rates
- Fast Fashion
- Eating Garbage
- Unnecessary monthly subscription
1 Bad habit
bad habit! What? How is that related to wasting or saving money? You just have to take a look at how much people spend on alcohol, for example. A fortune! Twenty bucks here or 30 dollars there don’tseem like much, but if you add it up over the course of a month, it will amount to a significant number. According to the Bureau of Labor Statistics, Americans spend about 1 percent of their gross annual income on alcohol.
For the average household, that’s $565 a year,$5,650 in 10 years, or a whopping $22,600 over 40 years. That doesn’t seem much to some of you. But don’t be fooled by this number. It takes into account all Americans, including those who don’t drink and those who drink once to twice a year. So if you only take into account those who drink regularly, that number would be much higher.
A few hundred dollars a month is normal for regular drinkers. The same goes for smoking, gambling, and other bad habits. The average cost of a pack of cigarettes is$6.28, which means a pack-a-day habit sets you $188 per month or $2,292 per year.
These numbers might not frighten you, but if you count the opportunity cost, you will probably get rid of these habits immediately. The opportunity cost basically means what you could have done with that money if you haven’t spent on drinking or smoking. If you throw that 2292 dollars every year into an index fund with a 7 percent return, with the power of compound interest, you can expect to have $489,593 in 40 years.
Next time before you buy that pack of a cigarette, imagine that number in your head. And now let’s get back to the video. Smoking is terrible, but you know what’s worst than smoking.
2 Paying high-interest rates
Paying high-interest rates. Credit cards are great. It’s probably the best way to build your credit score and maintain it. It is extremely important because it will help you to get loans and lower interest.
But here is when things get terrible. When you use a credit card to pay for things you cannot afford, what ends up happening is that you will not be able to cover your credit card debt at the end of the month and the interest starts rolling. Have you ever taken a look at how high credit card interest rates are? They could go as high as 20 or 30 percent.
The interest on your mortgage would seem like peanuts in front of credit card rates. That might not seem like a big deal, but 41percent of credit card users reported that they are failing to pay their bills on time. And that’s what these banks are counting on. They want you to forget! No wonder why total credit card debts have risen to almost a trillion dollars nationally.
So don’t ever get a credit if you can’t control your spending habits, especially if you have some really bad habits. How I keep my credit card interest-free is that I know how much exactly I spend. I can use a debit card to pay my bills and have absolutely no problem with that,
but I use a credit card because I would rather keep building my credit score. And on the last day of each month, I coverall my debt even though I might have another few weeks. If you still forget to pay your debt on time, then whenever you pay your bills or cover your rent, make sure you include paying for your credit card simultaneously. One of the trends that have been rising for the last few decades is,
3 Fast Fashion
Fast Fashion! And you know what? I hate fast fashion! Don’t get me wrong. They do make some good clothes and there is nothing wrong buying clothes and I personally love to dress properly, I am a big fan of fashion! But here is the problem. Since the market is flooded with cheap clothes, we, on average, started buying more clothes than need.
Take a look at your wardrobe. Do you really wear most of your clothes as often as you think? I am sure that you have 2 or 3 pairs of jeans and a few t-shirts that you were every day. The rest of your clothes have been lying on your wardrobe, probably for years. And like everyone else, you have clothes that you never wore but you though you need them when you were shopping.
The trend has become so popular that some people shop every week. That’s insane! What I hate about it the most is that, just because the clothes are cheap, you end up buying more clothes than you need. The question is, why buy a lot of low-quality cheap clothes? Instead, of having 10 or 20 pairs of jeans, just get yourself 2 high-quality jeans that you will feel comfortable wearing, and you would look much better.
And you will end up spending a lot less. That’s not the worst way humanity is wasting money. No matter how many clothes you buy, they definitely won’t harm yourself as the next thing on our list does.
4 Eating Garbage
Eating GarbageWhat? Who eats garbage? Unfortunately, most people literally eat nothing but garbage because most of what’s sold on the shelves of grocery stores are made out of harmful ingredients in many ways.
And if you consider the fact that fast food has become the new norm for years already. You can imagine how much garbage people are eating. People spend most of their money on food, and there is nothing wrong with that. But at least consume quality food that isn’tharmful to your body.
Almost all junk food that’s sold is filled with different types of sugar to boost your dopamine when you consume it and create a sense of addiction so that you come back for it again and again. And that’s done purposefully. So we ended up developing a habit of always eating junk food, sneakers bar, chips, or soft drinks.
Some studies even say that a lot of people spend almost 90 percent of their income on food, which is absolutely insane!
5 Unnecessary monthly subscription
Unnecessary monthly subscription Businesses realized that it’s much better to sell you a subscription that costs a few dollars a month than a product with a few hundred dollar price tags.
First, you aren’t going to hesitate that much since it’s just 10 dollars a month, especially if you enter your credit card information now. You will get the first month for free, but later on, you will completely forget about it, but the company will keep charging you forever.
There is nothing with getting a subscription you use or need, but when you sign up for the gym but then end up visiting it once or twice a year, I don’t think you need to renew your annual membership. 84% of Americans unaware of how much they spend on subscription services.
Have you realized that everything has recently turned into a subscription, music, video, movies, apps, games, software? Every few months, audit your spending and get rid of these unnecessary subscriptions because you will end up paying a fortune for something you don’t even use. And that’s your list of insane ways people waste the money they worked to earn with blood and sweat.
And now it’s your turn! What would you add to this list? How do you waste money? Let me know in the comments below.