6 (Easy to Fix) Things You Don’t Realize Are Costing You Money
As mindful as we try to be with our money, we’re not perfect. The average American spends $18,000 per year on nonessentials — and nearly $3,800 per year on impulse purchases.
Next: Pocket an Extra $400 a Month With This Simple Hack
Try: 10 Frugal Habits To Adopt Right Away in 2024
Even if you’re a careful spender, the reality is that most of us are spending money on things we don’t even realize. The good news? Most of these are easy to fix. Here are some of the most common things we don’t realize are costing us money:
1. Having a Low Credit Score
Most people know it’s important to have a good credit score, but it’s not always obvious how a low score can hurt you — or even cost you money.
We recently ran the numbers: The difference between a credit score of 620 and 760 could cost you $323 a month on a $300,000 mortgage. That same difference can also cost the average person nearly $80 a month on auto payments, credit cards and more.
The way to fix this problem, of course, is to raise your credit score. One good way to do this is to use a credit-building tool like Instal by CreditStrong, which is one of the easiest ways to boost your credit score without using risky high-interest credit cards.
The idea is simple: Instal will issue you a $1,000 secured loan, which means the funds will be secured away so you don’t have immediate access to them. Each month, you’ll make payments toward the loan. CreditStrong reports the payments to the three major credit bureaus, which helps improve your credit score. Once you’ve paid the full amount, the funds will be unlocked and you can withdraw them. Plus, your account will be reported as paid in full.
Instal also comes with free monthly access to your FICO score, so you can closely monitor progress toward your credit score goals.
2. Unused Memberships
Remember that gym membership you signed up for a few years ago, then stopped using almost immediately? If so, you’re not alone. Research shows that roughly two-thirds of Americans who have gym memberships never use them. It’s smart to review your bank accounts regularly, looking for automated recurring charges you may have forgotten about and canceling memberships you don’t use.
3. Not Taking Advantage of Your 401(k) Match
Research from the Bureau of Labor Statistics found that as of 2021, more than two-thirds (68%) of private-sector workers in the U.S. were offered 401(k) or other retirement plans from their employers, but less than half (49%) chose to participate.
Even among those who do participate, a large percentage don’t contribute enough to earn an employer match. This essentially means you’re leaving free money on the table. Check with your employer to find out how much you need to contribute from your paycheck to qualify for the match to help boost your nest egg.
4. Relying Too Much on Credit Cards
If you’re using credit cards to fund your lifestyle, you’ll want to pay the cards off in full every statement cycle or you’ll start carrying a balance and racking up interest. This can be a major expense because of the high interest rates most credit cards charge — typically at least 20%.
It’s easy to fall into the cycle of using credit cards for all your purchases, justifying it in your mind with the rewards you earn, but when credit card spending becomes habitual, you might not even realize how much you’re spending on interest and other fees each month.
This is an easy problem to fix. First, make an effort to stop using your credit cards so much. If you can’t afford to pay cash for something, then think twice about getting it in the first place. When you can’t avoid using credit cards, like when you’re booking a flight or hotel reservation, try to pay the balance in full on your next due date to avoid having to pay interest charges.
5. Missed Tax Deductions
The IRS offers numerous tax deductions that many Americans miss, including things such as job-hunting expenses, self-employment costs and medical bills, wellness expenses, sales taxes and student loan interest. Check with a tax advisor to discover tax deductions you might be missing. Taking advantage of those deductions can lower your income tax bill and save you money.
6. Using Unneeded Electricity
Every year, Americans spend about $19 billion a year on “phantom” electricity, Reader’s Digest reported. This typically happens when you keep laptops, tablets or phones plugged in even when you’re not using them.
For the typical American, the result is an extra $20 to $30 on your power bill every month. To save money, power down your devices when you’re not using them and use a power strip to easily turn off several electronics at once.
More From GOBankingRates
This article originally appeared on GOBankingRates.com: 6 (Easy to Fix) Things You Don’t Realize Are Costing You Money
