5 Bad Habits That Cost You Thousands Each Month
No matter where you are in your financial journey, the idea of throwing money away is pretty unsettling. Unfortunately, there are several common habits that many of us engage in regularly without realizing their full monetary consequences. Avoiding these financial habits can potentially save you a significant amount each month.
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1. Not Budgeting
A study conducted by Credit.com in 2023 indicated that 27% of people don’t have a budget. Some people avoid creating budgets, viewing them as restrictive and cumbersome. But the truth is, a budget is the most powerful tool in your financial arsenal. Not creating or following a budget could mean spending far more than necessary each month without realizing it.
Without a clear spending plan, you might miss out on opportunities to save or invest, thus compromising your long-term financial well-being. Start budgeting by listing out your monthly income and fixed expenses. Then, track your spending for a month and categorize it to better understand where your money goes.
2. Overusing Credit Cards
Credit cards are incredibly convenient, but their ease of use can lead to overspending. The average interest rate on credit cards is around 22%, which can add up quickly if you don’t pay off your balance. According to Experian, the average credit card balance is $6,501, meaning people are spending thousands on their credit card bills and a huge chunk of money on interest.
Limit credit card use to necessary purchases and you can pay off those in full each month to avoid interest charges. Remember that a credit card is not free money. Treat it as a tool to build credit and provide security, not to extend your purchasing power beyond your means.
3. Seldom Dining In
Whether grabbing lunch at a bistro or ordering takeout because you don’t feel like cooking, every meal purchased outside the home adds up — fast. A US Foods survey found that Americans spend a monthly average of $166 per person on dining out. Cooking at home is not only healthier but also a more cost-effective alternative that can save hundreds or more each month.
4. Paying For Unused Services
Subscription services have a way of quietly nibbling away at your bank balance. On average, Americans think they’re spending around $62 per month on subscriptions while they’re actually spending around $300 per month. Services like streaming, gym memberships, and monthly boxes are great, but if you’re not using them regularly, they’re just another unnecessary expense.
Take stock of all your subscription services, including those you’ve forgotten. Evaluate each subscription’s value versus its cost. If you’re not using it regularly, consider canceling.
5. Not Investing
Saving money is important, but keeping your savings in accounts with low interest rates means they’re not working as hard as they could be. By not investing, you’re missing out on potential returns that could grow your wealth significantly over time.
A GOBankingRates survey found that 28% of people have nothing saved for retirement and 39% aren’t contributing to a retirement fund. The historical average return on the stock market has been at least 7% after inflation. By not investing, you’re giving up potential future wealth.
You can significantly improve your financial situation by identifying and addressing these five common habits. While none of these changes will happen overnight, with time and perseverance, you could save yourself thousands of dollars each month because small adjustments can lead to big savings.
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This article originally appeared on GOBankingRates.com: 5 Bad Habits That Cost You Thousands Each Month
