5 Ways Youre Wasting Money, Not Saving It.
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Do you ever wonder where you spent all that money? Every year, people resolve to get out of debt, save for retirement and change their overall finances. When they receive their W-2s and get ready to file their taxes, they ask “What do I have left of all that income?” Where did it all go?
One of the most frustrating aspects of trying to save money is when you think you are saving, but in reality you’re wasting money. This usually happens when you have made bad assumptions when making a purchase or you haven’t analyzed the true costs of a purchase.
Here are five common ways people waste money when they actually believe they are saving it:
For most people, money simply seems to drip away in small amounts. Twenty hear and there seems to add up. You protest and say that you aren’t spending any extra money, but yet it is all gone in a short amount of time. Your expenses seem to be reasonable.
1. Buying gas at the least expensive gas station.
While this would seem obvious, the problem occurs when the least expensive gas station is a few miles off your regularly traveled route. If you are driving across town to save a few cents per gallon, the cost of driving to get the better price will negate any savings the cheaper gas price provides.
However, we all waste money on a daily basis. And we don’t even have to think about it. Take a good hard look at what you are really spending and see where you are spending your money without any thought. These are where your money leaks are. Once you know what habits are costing you money, you can take steps to fix them and start working on your resolutions.
Solution: Choose the least expensive gas station that is no more than a mile from your regularly traveled route. You can keep informed on which gas station is selling gas at the best price at such sites as Gasbuddy or MSN Gas Prices.
2. Going to different stores to get sale items.
People often believe that they are saving money by looking at the weekly discount ads that stores send out and finding the best price for each product they need. The problem is that by driving all around town to the different stores, you waste all of that savings on the cost of operating your car.
There are so many things that we say that we simply can’t live without. Most of these items are designed to make life easier, but do they really? In fact, most of them just cost us money. Is your high-tech lifestyle saving you time? Take a hard look at the fees and charges you are paying. For example, look at your telephone bill. Have you ever used the call forwarding feature? Why are you paying for something you never use? Are you paying $15 extra for a faster internet connection when it really isn’t any faster? Look at what you can and can’t live without. Chances are that you will get along just fine without all the extras.
And don’t believe that package deals are better buys. For example, you could get a phone package for $49.95 a month that gives you unlimited long distance, all of the basics and plenty of extras. However, are you really using it? With all of the taxes and FCC charges, you will be paying closer to $70 or $80 a month for that package. It may cost you less to break up the package and only pay for the features you need. If you don’t use your long distance very often, you don’t need to pay for unlimited minutes. The same applies for cellular phones. Don’t pay for minutes you never use.
Solution: Find the closest store that will price-match. While many stores don’t advertise that they will price-match, a fair number of stores still do. You may need to ask the manager to confirm whether or not the store does. Once you have located a store that will price-match, simply buy everything there and bring in the competitor’s ads to get the best price.
3. Buying the cheapest instead of the best value.
People often confuse the least expensive price with the best value. Unfortunately, the products with the least expensive prices are often a poor value. While price is an important factor that contributes to value, it isn’t the only factor that one needs to consider.
Solution: Look beyond price when you purchase a product. Consider how long you need it to last along with its price. Other factors you should consider that can contribute to value include quality, design, warranties and repair costs. By taking all these factors into consideration instead of focusing exclusively on price, you are much more likely to walk away with something that will be of value.
4. Purchasing items on sale.
Too many people simply accept what they are charged, no matter if it is correct or not. Now I know that talking to customer service can make you want to pull your hair out, but you shouldn’t pay any more than is actually due on your accounts. The main places I find billing errors is in telephone and cellular bills. Even if it is only $10, you shouldn’t pay more than you really owe. Get on the phone and have the error fixed before you pay the bill.
Purchasing items on sale is a great way to save money if they are items that you would have purchased anyway even if there hadn’t been a sale. The problem is that many people purchase items they would have never purchased except for the fact that they were found on sale.
Solution: When purchasing items on sale, only purchase those items that you would eventually purchase at full price. If it is something that you would not normally purchase, then don’t.
Let’s do a silent vote. How many of you have signed up for a membership that you have never taken advantage of? Think of gym memberships that you don’t cancel for months after signing up and never going. Think of the credit watch programs, credit insurance and access fees for websites. If you aren’t using it, don’t pay for it.
5. Buying in bulk.
While buying in bulk can reduce the cost per unit of the item you’re purchasing, it only saves you money if you consume all of it and consume it at the same pace you would if you had a lesser amount in the house.
Many times when people purchase in bulk, a good portion ends up in the trash because it goes bad before it can be used.
Have you ever considered how you shop? Shopping on sale can actually cost you more money. If you are buying things on sale that you never use or food that you never eat, you are wasting money on the delusion that you are actually saving. Only buy what you are going to use. For example, why upgrade your value menu meal to extra large gulp size if you aren’t going to eat the fries or drink all of the soda? You are wasting more than you are saving.
On the other hand, some items, such as candy, often get consumed at a much faster pace when there is a lot of it around than when there isn’t. Either of these scenarios can make purchasing in bulk more expensive, even with the lower unit price.
Solution: Take the time to make sure you carefully consider an item’s shelf life and how it will be consumed before buying it in bulk. To solve these issues, consider buying in bulk with friends so that you get the better price yet take home a unit size that avoids these problems.
The whole idea of mindless spending comes down to the fact that you aren’t paying attention to where your money is going. You have to train yourself to think about every financial decision you are making. You won’t see it happening immediately, but over time you will see your finances changing for the better. Think before you spend and always look for the way to spend a little less for what you need… [read more]
There are many ways that we fool ourselves into believing we are saving money when in reality we are wasting it. It’s important to look beyond the initial assumptions and take a critical look at the cost of all that we purchase. When you take the time to do this, you’ll know that the savings you get are real.
Source: www.thestreet.com
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