Some of the smallest charges and can add up to big bucks over the long run, from outrageous ATM fees to the daily coffee run. But other money-spending attitudes can affect your bottom line, such as using credit cards for everyday expenses or ignoring your retirement account. Here are a few of the biggest money wasters you may be guilty of indulging, and why they could be costing you more than you think.
- ATM fees. Ever been in a hurry and stopped at a different bank to hit the ATM? You could be looking at fees up to $5 depending on the bank, and these fees add up. If you use the closest ATM rather than your bank even 3 times each month, you’re looking at $180 a year out of your pocket for the convenience.
- Coffee. The average cost of a cup of coffee at a local Starbucks costs around $4. If you stop by the coffee shop 5 times each month, you’re looking at $240 a year spent on coffee, not included any additional purchases you may make. I used to stop by the coffee shop as many as three or four times a week – adding it up, I was spending anywhere from $45 to $80 a month on coffee and breakfast snacks alone. Now I make my own coffee at home each morning and spend about $5 a canister every two to three weeks.
- Cigarettes. The average price for a pack of cigarettes in the U.S. was $4.80 as of early 2010, according to the U.S. Centers for Disease Control and Prevention. Buying one pack a day could cost you over $1,700 a year. Those who smoke will also generally have to pay more each month for health insurance compared to non-smokers.
- Overspending on groceries. As I’ve mentioned before in a previous article about tips to save money on groceries, shoppers who avoid name-brand products could save 50+% on certain items. You could also shave 10% off of your bill by signing up for free loyalty cards, according to MoneyTalksNews.com.
- Using credit cards for everyday expenses. I’m guilty of this one too, so I speak from experience. There was a time when I had to charge living expenses such as groceries and gas to my American Express – and I’m still paying interest on it. Now, I’ve cut those cards and I’m steadily paying down debt, but at 14% interest each month, I’ve drastically increased the original $50 or $100 I borrowed.
- Buying too much or too little insurance. While you need health, car and home protection coverage, insurance isn’t exactly a stimulating topic. But knowing how much coverage you need versus what you have is important, because while having too much insurance is a financial drain, not having enough could be disastrous. Most insurance agents urge that policy holders review their plans every year and update accordingly.
- Not maximizing your money. The biggest waste of money is not investing your money properly. Having a high income is great, but without retirement savings you’ll be working your entire life. You don’t need to make a six figure salary to have a comfortable retirement, so investing the money you make properly is extremely important. If you can invest in a Roth IRA or your company offers a 401(k) match, take it! If you want to invest in stocks but you aren’t sure where to begin, consider visiting a local branch of investment firms for help.
By removing some of the smallest charges and fees you pay each month, your budget will thank you. Consider writing down your expenses for a month or two — you’ll find a surprising amount of money wasted on little things you wouldn’t have noticed before. Once you have a solid emergency savings fund, properly reinvesting the money you saved is the next important step.