When we have bigger goals and dreams, some short- term sacrifices might be necessary for the long-term gains.
Editor’s note: This article was originally published on January 24, 2020. It has since been updated.
Many of us focus on earning more money to meet our needs rather than pairing down on our expenses. Sometimes, it's just not possible to skimp on the expenses, but a careful review of your spending habits will reveal many unnecessary expenses that you can easily do away with. While it might appear like a small amount at the moment, by the end of the year, it could actually add up to several hundreds of dollars or more.
While some might appear to seem like sacrifices, you don't need to give up on things that really matter to you. Instead, you can play smart by detecting anything that drains your pocket and saving up for things that you love to spend on, apart from having a backup for emergencies and saving up for retirement.
So, here is a list of things you should not do if you want to save up:
Our monthly bills for water, gas, electricity, and other utilities could go down if we are more careful with our consumption. Many of us make the mistake of running the dishwasher when it's not full, doing laundry with half loads instead of full loads or not checking for leaks, all of which lead to water wastage. When it comes to electricity, we forget to switch off or unplug our devices once they are charged, and that too uses up electricity, according to mystayathomeadventures. For instance, if we don't switch our laptops off or don't clean vents and filters, we are losing the opportunity to save up more money. While you might think these don't make any difference, you'd be surprised how much you can save up if you consciously bring down unnecessary monthly bills. Do check if you are using the best plan for your mobile connection, internet, etc.
Whether it's your credit card bill, mortgage or student loans, if you don't pay those on time you are charged more for late-payments and sometimes, a higher interest rate, says MentalFloss. A credit card company could be charging you a $25 to $35 fee per late payment and decreasing your credit rating. When it comes to loans, not making regular payments can easily become a huge drain on your bank account as the interest will add up over the years. A smarter thing to do is pay off debt before it snowballs into something unmanageable. The key is paying it off as soon as you receive your paycheck on a monthly basis.
Getting an extended warranty for the off chance that your appliances or electronic items break might not be a great idea. "It’s a bit of a scam. These are money-makers for retailers and they push them pretty hard," Bob Hunter, director of insurance for the nonprofit Consumer Federation of America, told CNBC. "There’s also huge commissions on these products," he added. Also, if you're using a credit card to buy big-ticket items, a protection plan might already be included in the purchase.
If you have a gym membership and are not utilizing it by sitting at home, it's a complete waste of your hard-earned money. Be honest with yourself. If you think you are not at a phase where you can visit your gym regularly, then cancel the membership. You can still meet your fitness goals by running, swimming in a neighborhood pool, or exercising at home with the help of online videos or apps. You can invest the money you save on eating healthier and maintaining a balanced lifestyle that lessens your stress, which is likely to save your healthcare costs in the future. As per MentalFloss, you could be paying almost $58 a month for a membership to a gym or fitness studio, but if it's not utilized you are throwing away the cash. Until you are sure to be a regular visitor, don't pay for it. The same goes for magazine subscriptions, apps, movie subscriptions that you don't use regularly.
This is probably the biggest blunder when it comes to having a healthy balance sheet. There are many tools and apps available to create and track a monthly budget. You can customize the settings and make it a simple affair. Or you can even go old-school and write down your budget in your journal or notebook. The point is if you do not have a plan you are extremely likely to undersave and overspend.
If you are dining out often, or go out for coffee every day, or grocery shopping without a shopping list, you are likely to spend more than you need to. Learning to cook a few easy to make dishes and making your own coffee can save tons of money. If you shop for groceries regularly from one store and they have a rewards card, it can help you save up more money. There are also coupons that can be used at restaurants, coffee shops, and supermarkets.
You might also be throwing out leftovers more often than you should, when they can be heated up and had as a meal on the next day. Similarly, keeping track of expiry dates is a big one that many miss doing, leaving good food going stale and thrown away.
Impulse buying often is a direct result of not sticking to your budget (or not having one to stick to in the first place). Another trick us to buy used goods instead of new ones when it doesn't make a difference. Books, furniture, vintage clothes, etc. are a few great examples. Another big trick is to not buy into the marketing gimmicks of big brands and choosing to buy non-branded, quality items. You can save a ton of money if you plan your wardrobe and have a good collection of basics and a few key pieces. Another trick is to opt for non-disposable, long-term products. For instance, if you're buying disposable razors, you can switch to the non-disposables ones. If you are using bottled water, you can switch to carrying a eco-friendly bottle and filling it before you head out.