8 Ways You're Wasting Your Money And You Should Stop Now!

About once a year I go through a phase—a deliberate phase—in which I evaluate our family finances to see where we’re doing well and where we aren’t doing so well. I especially look for places we are spending money we don’t need to spend—bills that are too high, subscriptions we no longer need, and all of those little money-wasters that eventually add up. And over the years, I’ve collected quite a list of ways that we, and perhaps you, waste money. Here are some of them:

THE DAILY LATTE
I read quite a few books on personal finance and there is a trend I have noticed in recent years: Every book now uses Starbucks as the negative example of financial management. The math really is that simple: $5 per day for that latte, multiplied by 365 days in the year, adds up to an extra mortgage payment or two. And if both of you go every day, the damage is doubled. Consider brewing at home, or at least sticking with the brewed instead of specialty coffees.

KEEPING UP
There is something in all of us that longs to keep up with the neighbors—to have the things they have and to do the things they do. But it’s a fool’s game, of course. Envy and jealousy are never satisfied, and the more you have, the more you’ll need. It is far better to learn contentment and to stop fooling yourself into believing that more stuff will bring more happiness. A quick audit of your finances may show all the different ways you are trying to keep up and get ahead of your neighbors. It’s wasted money.

CLUB PACKS AND JUMBO SIZES
Club packs and jumbo sizes offer great value, but only if you can consume it all before it expires or is otherwise ruined. The stores have a knack for knowing exactly what products you are likely to buy in such quantities that you cannot possibly get through them before they go stale (or melt or wilt or grow mold or…). Buy the toilet paper, but be careful of the crackers, flour, or vegetables.

COUPONS
Just like jumbo sizes, coupons can offer great value. Who doesn’t want to save a few dollars or even a few cents, just for waving that little piece of paper? But coupons fail you when they are for something you are buying only because it seems like a shame to miss out on such a good deal. If you wouldn’t buy it anyway, your savings come to exactly nothing. If it’s brand name but still more expensive than the generic, the same is true. It’s important to be honest with yourself: Sometimes you just can’t afford to save any more money. And while I’m on the subject of shopping, don’t buy the licensed shampoo or toothbrush or band-aids—you are paying extra for the picture of the princess or superhero.

KINDLE BOOKS YOU WON’T READ
I’m all for buying Kindle books at a discount, and there are plenty of phenomenal deals on phenomenal books. But if you buy those books and then never read them (or never even open them up to refer to them), you are getting precisely nothing for your money. Collect them if you know you’ll read them or are certain you’ll want to use them in the future. Otherwise, take a pass on them. It’s only $1.99 each, but that still adds up to a lot over a year.

BUYING JUNK
Sometimes you can save money by investing a little more up-front. Those dollar store toys may mimic the brand name, but if they cost half as much but break on the way home (which they always did for my kids) you aren’t any further ahead. Electronics, pots and pans, and even contractors—through hard experience we have learned it is better to spend a little more at the beginning to get a lot more in the end. Financial stewardship doesn’t always mean spending less.

PAYING CASH
We need to be careful with this one, as some people, by wisdom or necessity, force themselves to hold to a cash budget. However, for those people with good habits and financial self-control, credit cards offer points or cash-back—a sweet little bonus for those things you would buy anyway, or those things you can use to treat yourself. Play your cards right, and you may be able to begin saving for that vacation, or enjoy a bit of free cash, just for using your credit cards wisely. I’m bringing my family to the Ligonier conference this year, and I owe it all to points.

PAYING INTEREST
It seems appropriate, after pointing out the potential value of credit card points and perks, to speak to another massive money-waster: Credit card interest. Credit card companies are betting that they can get you to over-spend so they can charge you their exorbitant interest rates. Don’t ever carry a balance! Play the game right and you can have all the benefits without any of the drawbacks.