Surprising Ways You’re Wasting Money

Neil, an IT professional, earns a decent salary to sustain his family consisting of three members who are dependents. At the beginning of every month like other salaried people, he plans their monthly budget and spends money as per requirement. Neil’s wife, Tina, is a homemaker who very smartly and diligently saves money for emergencies. However, month-end when Neil sits down with the expenses incurred, the couple keep pondering where their extra expenditure came from.

Such ‘surprised’ are not unusual. We begin our month swearing we won’t spend one penny more than we need to, but those plans get thrown right out of the window the moment we see anything under a sticker that says ‘SALE’.

Let’s take a look at some such scenarios where we spend more than we need to, and end up deviating from our savings and investment plans.  

Using Credit Cards

A credit card is like a superpower – with it comes great responsibility. It is a financially empowering tool, and yet so dangerous if we’re not careful about how we use it. You may go on using it and not know how much you’ve spent in a month till you get the statement in your hand. Credit card bills are not something you want to delay settling. With interest charges anywhere from 1.5% to 3% a month, it is absolutely one of the most expensive credits you will take on. So keep track of your card usage, your due dates, and your bank balance to be able to settle your credit card bills on time. Make smart use of your reward points – and that way,  you end up gaining from your card use.

Utility Bill Payments

Bills for services like electricity, water, telephone, broadband, etc. should always be done by the due date. If you miss your due date, the concerned authority will add an extra arrear charge or fined extra for late payment. Always automate your payments. Not only will this allow you to settle the bills on time, most banks or cards would also offer reward points for making utility payments through them. Not only does this save you from the task of manually checking and settling your dues, you’re also getting rewards for automation.  

Monthly Subscription Payments

Neil loves to read travel magazines, so he subscribes to magazines every month. He also subscribes to tonnes of lifestyle and entertainment channels on the DTH, and subscriptions on the internet. These services don’t come cheap. Neil rarely consumes everything he subscribes to. Yet he does not cancel those subscriptions. A few hundred rupees lost every month become several thousand rupees over a year. It’s a small fortune that could have been invested. Check your subscription packages to cut costs wherever you can. Chuck monthly subscriptions that are of no use to you. For subscriptions you need, make a semi-annual or annual payments, for these would be cheaper than monthly subscriptions.

Food – Buying & Wasting

Wastage of food is one of the worst forms of excesses. According to a survey, the National Resources Defense Council, states that, in America, nearly $165 billion worth of food is thrown as garbage on an annual basis. Often, this is perfectly good food. Not only is this a massive waste of money, improperly discarded food also creates methane which harms the environment by doing its bit to hasten global warming.

Do you consume every food item you buy? If not, can you do something to prevent it? It would potentially save you lots of money. Careful not to buy food that spoils quickly. Buy items furthest from their expiry dates for longer shelf lives. Do understand the portion requirements of you and your family while eating out. Over-ordering results in wastage, and restaurant food does not come cheap, especially with its attendant charges and taxes.

Lastly, do teach your kids to not waste food. It’s incredibly hard to produce – and with all the hunger in the world, it’s almost immoral to throw it away.

Sale Shopping

The moment you see a banner ‘annual sale’, ‘stock clearance’, ‘winter sale’, etc. the first thing that you do is plan your shopping trip. Your three-point agenda is to buy, buy, and buy. When you observe the habits of people who become rich, you’ll notice a trait common with most of them: they tend to buy things whose value appreciates over time. They buy equity, funds, bonds, bullion, property and suchlike. Spending on lifestyle choices – whether or not those choices come at discounted prices – will make you feel good for a time. But it’s also one of the worst things to do with your money. There’s no appreciation in value of those purchases, and it is all money down the drain – money that you could have spent investing and making your future self richer. The more you cut back on lifestyle choices and invest those cut-backs into appreciating assets, the wealthier you are going to be in the future.