Top 4 Things You’re Wasting Your Money On: According to Financial Advisors

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If you’re looking to add a little more wiggle room in your budget or increase your savings efforts, our financial advisor team has some thoughts on spending categories worth examining to make a positive impact on your expenses.

Check out the top four things our experienced financial advisors believe people are wasting money on.

MONTHLY SUBSCRIPTION SERVICES

“Remember that free trial you forgot to cancel that now costs you $25/month? Yeah those can add up pretty quickly.

Not keeping a close eye on your budget and monthly expenditures can leave you spending a few hundred extra dollars a month on things that you aren’t even using; that ends up costing you thousands per year.

Keep a close eye on your monthly subscriptions and STOP the ones that you don’t need.” – Nik Aamlid, CFP®, CAP®, Wealth Advisor

UNPLANNED DINING EXPENSES

“Life can get busy and grabbing some fast food is convenient. Other times, dining out and trying new, amazing foods at high-quality restaurants is awesome!

However, when one or both of these occur spontaneously and frequently: it really adds up.

The average American spends $3,639 a year on fast food, roughly $300/month! Say you cut that in half, and begin saving $150 every month under your mattress. In 5 years, there will be $9,000 under your mattress. Let’s say you invest it and assume a hypothetical 6% annual rate of return and you reinvest your earnings. Compounded annually, your amount would have grown to approximately $10,473.60.2

On the other hand, if you use the full $300 to eat, well, I hope it was on some stellar food, but know you will NEVER see it again.

However, if you can save some of those dollars for the short or long-term future, there will be more dollars waiting for you in the future.

When budgeting, try playing around with setting a monthly dollar limit on fast food and/or eating out with your spouse or your family. Consider setting that budget up so you only go out to eat once or twice per month. This will help keep your plan grounded and while still allowing you to enjoy the occasional pleasure of amazing foods and restaurants.” – Luke LaRock, NSSA®, Associate Wealth Advisor

Sources:

Ramsey. “How Much to Budget Each Month for Eating Out” Ramsey Solutions. 20 Dec. 2023, https://www.ramseysolutions.com/budgeting/average-eating-out-cost#:~:text=Americans%20spend%20an%20average%20of,%243%2C639%20eating%20out%20each%20year.

TRANSPORTATION COSTS

“Don’t waste your money on transportation.  A quick google search will lead you to believe that you can spend upwards of 15% of your income on transportation (vehicle payments, insurance, gas, maintenance, etc).

As humans, we tend to buy the things we ‘want’ and justify them as a need.  Transportation itself is a need, but it’s a terrible investment.  Nearly all modes of transportation depreciate in value, meaning they are worth less every day you own them.

If you buy the depreciating asset with borrowed money, it magnifies the problem as you are paying interest to someone else (the bank) while your investment is depreciating.

We can’t get away from all  transportation costs but we can minimize them.

As a goal, I would counsel clients to keep these costs under 8% of their annual budget, with a goal to work towards 5%.  The less you spend on transportation, the more you can invest in things that “moth and rust” won’t destroy.” – Ryan Ovenden, CFP®, Wealth Advisor

“KEEPING UP WITH THE JONESES”

“This can become a never-ending pursuit of more which, when boiled down, is a heart problem.

Often that problem stems from either lack of contentment or not having clearly defined values/goals. This is why we encourage people to go through the Plumbline Process to help them discover their True Wealth.

Once you have defined your values, you can set your goals based on what is important to you, not your neighbor or friend. This is when you start to have a true sense of contentment with what you have been given and helps us clearly define a path towards achieving what is most important to you.

Contentment is a beautiful thing and something that you won’t experience when trying to ‘Keep up with the Joneses.’” – Ethan Brouwer, NSSA®, Associate Wealth Advisor

Want help establishing your own financial habits for the year ahead or just need an accountability partner? We’re here to help!

Email any of us individually on our profile pages or reach out here!

The opinions contained in this material are those of the author, and not a recommendation or solicitation to buy or sell investment products. This information is from sources believed to be reliable, but Cetera Advisor Networks LLC cannot guarantee or represent that it is accurate or complete.

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