If you’re like me, you work hard for every dollar that comes into your house.
Are there days where I wish I could monetize my rear end like Kim Kardashian and expend less energy to earn a buck? Absolutely! However, until my butt gets the attention it needs to pay the bills, I’m stuck working like 99% of the population; and what I hate more than anything, is working hard to earn a buck and then wasting it because I didn’t have a better plan in place.
In my day job, I help people make smart money choices all the time, and this is no easy task. An endless supply of money wasting traps lurk around every corner and sometimes you don’t see them until it’s too late.
Kiplinger recently released a great list called 30 Ways to Waste Your Money, and I have to confess that many of these seemed like a no-brainer to me (after all, who doesn’t know that buying name brand vs. generic is a money waster?), but I thought a few of these warranted a special mention.
Being a Senior Citizen (Apparently a No-No)
According to this article, senior citizens get screwed just for being senior citizens. The next time you talk to grandma or grandpa, make sure that they are not assuming the senior discount is the best deal. There are some discount tickets or deals that are better than the senior discount, so the old folks need to shop deals more and assume less otherwise they are throwing their precious fixed income dollars down the drain.
Buying Bad Insurance Products
Another money waster mentioned on this list is paying for too much insurance. There’s a great Farmer’s Insurance commercial out there that asks if you are paying for this (picture of crappy car) but insuring for this (picture of sports car). It’s a great reminder that you may be over insured.
We all want to think that we have quality belongings or a wonderful car; however, you don’t necessarily need to insure as high as you feel you do. A good best practice is to review all of your insurance coverage at least once a year and question each coverage level. You could be wasting hundreds of dollars a year insuring beyond what you need.
Low Interest Savings
This article also suggests that you could be wasting money keeping your cash in a low to no interest savings account. While I couldn’t agree more with this money waster, I disagree with the alternative that they suggest. According to the writer, they suggest CDs or high interest savings accounts, which is essentially telling you to not waste your money on granny smith apples, but buy golden delicious apples instead. You’re still talking about apples.
Because of the state of bank’s balance sheets post the 2008 financial crisis, the difference between the rates they will give you in a savings account, a CD or a high interest savings account is about 10 to 50 basis points or half a percent. Interest rates are low in most bank accounts, and I believe that you are wasting your money keeping it in a bank period.
If you really want to put your money to work and not waste it, you need to invest it. Right now, inflation is a little under 2% and most bank savings accounts (CDs and high yield accounts included) are paying 1% or below. If you stick with the bank approach, you’re not even beating inflation with your money. The only way you can get ahead of inflation is to look at more investments. You will take more risk; however, you should expect more return and less money wasting in the process.
What are some big money wasters in your home?