13 Money Mistakes That Are Costing You Up to $10K a Year Without You Knowing It
A lack of financial knowledge, known as financial illiteracy, isn’t anyone’s fault, but not knowing enough about financial matters can be costing you significantly.
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According to a recent survey by the National Financial Educators’ Council, 15% of the approximately 3,000 people surveyed believed they had lost as much as $10,000 last year due to their lack of financial knowledge.
The sad fact is that simple money mistakes can quickly add up to significant losses. Here, experts explain some common money mistakes that are costing you up to $10,000 per year without your knowledge.
Overspending
Do you know how easy it is to blow $10,000 in just one year?
According to Jamilah McCluney, an advisor at Black Wealth Financial, it’s easier than you may think: “Spend just $27.50 per day and you will spend over $10,000 each year.”
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Overuse of Food Delivery Services
Regularly order from DoorDash, UberEats or any of the other overpriced food delivery services, and you’ll probably spend even more, McCluney warned.
“If you have a tendency to overspend and not track your purchases,” she said, “remove the conveniences that make it easy for you.”
App-Based Payment Options
Unlink Apple or Chrome Pay, food delivery apps and any other app or payment option that makes it easy to think less and automatic for you to purchase, McCluney said. “You’ll quickly watch your money available to save add up.”
Frequent ATM Withdrawals
Regular ATM withdrawals from non-network or out-of-network ATMs can accumulate substantial fees over time, according to John Browning, financial advisor and founder of Guardian Rock Wealth.
“These fees are often overlooked because they seem small individually,” he said. “However, if you’re making multiple ATM withdrawals each month, these fees can easily add up to $10,000 or more annually.”
Browning recommended you consider using your bank’s ATMs or opt for a no-fee checking account to save on these costs.
Failure To Optimize Health Savings Accounts
For people who have access to Health Savings Accounts (HSAs), these provide an opportunity to save on healthcare expenses with tax advantages, Browning explained.
“Some individuals underutilize their HSAs by not contributing the maximum allowed amount or failing to invest their HSA funds,” he said. “By optimizing your HSA contributions, investing wisely and using these funds for qualified medical expenses, you can save thousands of dollars annually in tax benefits and potential investment gains.”
Not Negotiating Regular Expenses
Many people don’t realize that regular expenses, such as insurance premiums, can often be negotiated, according to Alan Beard, CEO of Interlink Capital Strategies.
“This includes auto, home and life insurance rates,” Beard said. “A simple negotiation or shopping around for better rates can result in annual savings of thousands of dollars.”
Not Budgeting
A lot of people get into trouble by simply not utilizing basic financial skills, like budgeting, according to Hunter Schertz, financial advisor at Five Pine Wealth Management.
“I know it’s cliche, but creating and utilizing a budget that works for YOU is crucial to having control of your money,” Schertz said. “Knowing precisely where your dollars are going puts you in the driver’s seat and ultimately helps you achieve your goals faster.”
Glorifying Credit Card Rewards
Credit cards know how to entice members with such dramatic offers as 40,000 points here and 5% cash back there, Schertz said.
“[It] can be tempting until you spend more than you can afford,” he added. “Not only will you be playing catchup with last month’s statement but also 20% to 30% of your hard-earned money lines the pockets of someone else.”
Not Understanding Taxes
Taxes, an inevitable part of life, will be one of the largest expenses anyone makes, Schertz said.
“Investing in just 30 minutes to learn about the tax code will put you leagues ahead of most,” he said. “Simply learning about deductions, credits and tax-advantaged accounts can save you hundreds, if not thousands.”
Lack of Tax-Efficient Investing
In another tax-related area, not structuring investments in a tax-efficient way can lead to missed savings opportunities, according to Jacques du Toit, an accountant, real estate investor and personal finance expert. “Proper placement of investments in the right accounts can result in substantial tax benefits.”
High Investment Fees
Excessive fees on mutual funds and other investment products can significantly diminish potential returns over time, du Toit said. “Opting for low-cost index funds and being vigilant about transaction fees is crucial.”
Carrying High-Interest Debt
High-interest debts from credit cards “can lead to substantial interest payments,” du Toit said. “Prioritizing the repayment of high-interest debts is imperative.”
Energy Inefficiency
Ignoring energy efficiency in homes can result in higher utility bills, du Toit warned. “Investing in energy-efficient appliances and adopting energy-saving practices can lead to noticeable savings.”
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