Top 10 Money Wasters

A lot of us say we're interested in saving money. But how many of us are actually taking the time to examine where we're spending it? After all, how can we save what we don't have?

Today we're going to talk about ten ways some of us waste our money and some ways we can change our spending habits to keep more of that sweet, sweet green stuff.

The Spending Mindset

Despite the benefits of putting money away, a lot of us take only a passing interest in actually doing it. As young adults, we don't think much about saving up for retirement or other long term goals and then, as adults, life gets complicated and distracts us.

We wake up in the morning, rushed by the demands of the day and head out into the world without a game plan. On the way to work we grab a cup of coffee at a local coffee shop, snag snacks from the vending machine at break time, and wolf down lunch at the fast food restaurant around the corner on our lunch break. On the way home we fill up our gas tanks and pick up the latest magazine at the closest convenience store or gas station then head to the pharmacy to pick up our prescriptions. When paying for all these things, we may not notice that we've swiped our debit card one too many times and that our bank balance has gone into the negative again (but the bank has kindly transferred money into the account as a convenient service … for a fee of course). The days turn into weeks which turn into months and then years without much thought about where our hard earned money is going. Does this sound like anybody you know?

Don't worry. There's still hope for us. Let me show you ten ways we waste our money and how to change our spending habits for the better.

1. Convenience Stores

Many people don't think about the mark-up they pay for the things they buy at the convenience store or gas station. Here's a hint: it's huge. This is because these stores don't purchase food in the large quantities that a grocery store does and also because they make you pay more for the convenience they provide. So, unless it's an emergency situation, avoid shopping there. The premium you pay for convenience is not worth the “convenience” you get.

For example, a Coke at a convenience store might cost you a dollar or more, while you can go to the grocery store and buy a 12 pack for $4. If you have a habit of stopping to buy a drink on the way home, buy a 12-pack instead and keep it in a refrigerator at work. Then, you can just grab one on the way out the door and save yourself a whole lot of money. Now that's convenient!

2. Cell Phones

When is the last time you took a good, long look at your cell phone bill? Grab it now or pull it up on your phone. Are there any surprises on it? Is it more than you remember it was the last time you checked it out?

With all the options for cell phone plans out there, the time has long passed when you were stuck with a plan that didn't fit your lifestyle and budget. In today's market you can pretty much find a customized plan that's right for you. You just need to do some shopping around and some old-fashioned negotiations with the salesperson. Remember, they get paid on commission. If you walk out the door to their competitor, they're the ones who lose out. Asking for special introductory offers or other deals is expected and you shouldn't feel that you're asking for something out of the ordinary. After all, it's your money and you worked hard for it. It's only right that you don't waste it. If you can purchase something for a fairer price just by asking for a discount, do it!

MINI-TIP: While we're on the topic of cell phones, scan through your phone bill for added features like app subscriptions. If you aren't really using these features, get rid of them - they're costing you more of your hard earned money each month!

3. Soft Drinks at Restaurants

This one is a sneaky money waster. When you go out to eat, not only does ordering beverages along with a restaurant meal boost your total expenses, but those soft drinks, cups of coffee, and iced teas also have one of the highest markups of any restaurant item. (It usually only costs a few cents for the syrup, sugar, water, and ice.)

Consider a typical family of four that eats out twice a week at fast casual restaurants (which is typical for a middle class family today). Assuming an average price of $1.50 for a fountain soft drink, that totals $12 a week, $48 a month, or $624 a year. Just cutting out this one item from your meal could mean significant savings that could go into something much more productive (such as a retirement investment plan or college savings account). If you invest $624 at the market average of 9% a year every year, you would have almost $32,000 at the end of 20 years. So dine out, but opt for water!

4. Unnecessary Bank Fees

A lot of us unknowingly pay a lot to our banks in the form of fees. Sometimes it's for using an ATM that's out of our network and at other times it's for something as simple as a monthly fee just for keeping our account at the bank open. If we're not paying attention we may even accidentally overdraft our account and incur an overdraft fee. These charges can add up … fast!

Take a few minutes and pull up your last couple of bank account statements. Are there any surprises there? Are you being zinged by fees you hadn't noticed before?

Here's a quick example: Some banks charge ATM fees for using another bank's ATM. These can be as high as $5! This amounts to a 25% one-time fee for a $20 withdrawal. Add to this the fee your own bank may charge you on their end of the transaction and you can see that it's really costing you a lot of money each time you do it. You'd be better off using a credit card to make your purchases and then pay the bill off each month.

Here's another one: I really have a problem with overdraft fees. These days the average overdraft fee can end up being in the $30 range. Have a few of these each month and you're bleeding out hundreds of dollars a year from your wallet. I realize that the huge fee is to give people an incentive to avoid overdrafing their account, but there's a better way to accomplish this. Here's my solution. Set an alert on your account when the balance drops below $100. That way, you can still withdraw some money from time to time when you hit that limit but you'll be getting a warning when it's time to stop spending and start depositing.

Finally, find a bank account that doesn't have a monthly fee. I really don't like paying fees for something I'm not getting a lot of value for, especially for an account that's not paying me any interest for parking my money there. In today's economic environment, interest rates have plummeted and most checking and savings accounts are paying a dismal amount of interest if they're paying any at all. Does it make sense to keep your money in an account that charges you a fee when the bank is using that money to lend out to others for loans they're making money on? Do some research and find an account that is fee-free. Trust me, they're out there. You just need to ask some questions and do some digging.

5. Magazines

Impulse buying can get expensive. If you're the type of person who likes to occasionally pick up your favorite magazine from the local grocery store or newsstand, consider getting an annual subscription instead. Even if you don't want the magazine every month, a couple of issues at the newsstand are enough to cover the entire annual subscription. For example, a 26-issue subscription to Forbes Magazine will cost you less than $25, while one issue at the newsstand costs $5.

One other benefit I've noticed with my magazine subscriptions is that I receive emails from the publisher each month with extra articles that aren't found in the monthly newsstand issues. Also, they send me special offers for discounts to renew my subscription as thanks for being a loyal customer. (This trick alone has saved me hundreds of dollars over the years.)

6. Annual Credit Card Fees

Unless you have a poor credit history, there is no reason to pay annual credit card fees. Period.

A host of Visa, MasterCard and Discover cards have no annual fee, yet many people pay up to $100 a year for the privilege of holding a credit card. Unless you're an ultra-wealthy, exclusive holders of an elite-level credit card with exclusive perks, most people should not be paying annual credit card fees.

If you are paying an annual credit card fee and have good credit, give your card issuer a call and let them know that you're thinking of switching credit cards to another one that doesn't have an annual fee. Odds are they'll be able to switch you to another card in their portfolio of plans which will allow you to remain one of their loyal customers without having to pay that annoying annual fee. At the very least, they should be willing to waive the annual fee on the card for this year. This will give you time to keep looking for a different credit card that actually gives you a better deal.

And speaking of credit cards, make sure you make your payment on time every month, even if it's the minimum. Many credit cards charge up to $39 for monthly late fee charges, charges which accrue interest along with your existing balance.

(Also, paying on time each month keeps your credit score healthy and high.)

7. Online Subscriptions

Subscriptions for products and services are all the rage these days. You can have monthly memberships at gyms, subscriptions to delivery services like Amazon Prime, online streaming video services like Netflix, monthly memberships for online course services like SkillShare, or even for services like unlimited monthly car washes!

Now don't get me wrong. Some of these are really useful and practical in today's world … if you're really using them. But what if you're not?

Pull up your last bank statement and check for monthly fees for subscriptions. Are these items you use every month or have you just forgotten that you're still paying for them? Many subscriptions begin as a 'free introductory period' for a service that looks great at the start but that you don't end up using on a regular basis. What's worse is when that 'free introductory period' ends and you're automatically billed for the service without realizing it. By the time you notice, it's too late to get a refund. (I can't even tell you the number of times that that's happened to me!)

So, give these products and services a good, hard look and figure out if they're still a good fit for your lifestyle. If they're not, drop them. If they are, set a reminder for yourself to re-evaluate them in a year. Your needs change over time and sometimes canceling them can save you a lot of money.

8. Medications

Do you ever pay full retail price for your medications? Maybe you believe you're paying a fair price by getting reduced co-pays through your health insurance plan. The truth of the matter is that there's a huge difference in the price of medications from pharmacy to pharmacy and just a little bit of comparison shopping can go a long way towards saving you money. One of the best sources for finding the best price on most common medication is through Good Rx. Type in the medication you're looking for and the area you live in and they'll bring up a list of local pharmacies who sell it and the current price it's selling for. You can get a free membership card at most pharmacies or sign up online.

9. Gasoline

Do you go to the same gas station every week? Is it out of habit or because they offer the best price or superior service? If you do stop at the same place on a regular basis, do you pay the price at the pump or are you a member of their discount club and get ten cents or more off a gallon?

I have two or three gas discount cards and use a great online service called Gas Buddy. Before I head to the gas station, I open up their phone app to find out where the best gas price is in my area. Often I find a lower price for gas up the road or around the corner from where I am. As long as it's good quality gas and the station isn't out of my way, I'll head that way. I'm don't tie myself to any particular brand or location.

Just by taking a few moments to check the price before heading out, I've saved literally hundreds of dollars each year. That's extra money in my pocket I can put to good use.

10. Coffee

Now, I know there's been a lot of talk about the high price of designer coffee these days but hear me out. I'm definitely not advocating that you give up your incredibly yummy pumpkin spice latte. It's just that if you're going to drink it, shouldn't you also be able to buy it at a reasonable price? If you're paying (on average) $3.50 per cup for your specialty coffee just six days a week (Sunday is a day of rest after all) then you're paying $21 each week for your caffeine fix. That works out to over $1,000 a year!

Suppose instead that you invested (not spent) $300 on a high-end coffee maker along with another $200 for the specialty coffee packets to go along with it and drink it in a fancy $30 uber-insulated designer coffee thermos. You'd be saving $500 each year while still getting that amazing, hot, pumpkin spiced latte fix you know and love.

Wrapping it Up

So, that's ten simple ways you can save yourself hundreds if not thousands of dollars each year just by changing a few daily spending habits. The process isn't meant to take place in a day, but over time, you'll change your mindset about your relationship with your money. Happy saving!

Steve