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27 ways you waste your money

27 ways you waste your money

Almost all of us have holes in our budgets.

And as with other kinds of leaks, you may have hardly noticed some of them. But those small drips can quickly add up to big bucks.

The trick is to find the holes and plug them so you can keep more money in your pocket.

That extra cash could be the ticket to finally being able to save, invest or break the cycle of living from payday to payday.

Consider these 27 common ways people waste money.

If any of them sound familiar, start plugging your budget holes right away.

Also read: A key financial habit that can make you rich

Buying at the wrong times

Most things are marked down at certain times each year.

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So planning your purchases to get big-ticket items when they're at their lowest price can save you hundreds of dollars.

For example, clothing is dramatically marked down at the end of each season and during sales events over long holiday weekends.

Furniture is discounted as much as 60% during clearance sales in January and July before new styles are released in the following months.

Prices on TVs and computers are slashed on sales days -- and the list goes on.

Timing your travel purchases right can also help you save big.

Fares for domestic flights are at their lowest, on average, 54 days in advance, according to a study by CheapAir.com.

For flights to Europe, you'll get the lowest fares by booking 319 days in advance.

And to get the best rate on a hotel room, you typically need to book a stay 14 to 21 days in advance.

Also read: Three ways to become a superannuation millionaire

Tossing food based on the expiration date

There's a good chance you're throwing away hundreds or even thousands of dollars' worth of food each year before it has gone bad if you're using sell-by and expiration dates as gauges for whether food is still edible.

These dates are just manufacturers' best guess of when food is at peak quality and are not related to safety, according to Emily M. Broad Leib, director of the Harvard Law School Food Law and Policy Clinic.

Because of confusion over food date labeling, a family of four spends between $1,365 and $2,275 per year, on average, on food that is wasted.

Consumers can usually expect food to be safe for another five to seven days past the sell-by date printed on the package.

The best test to tell if something is still good is to smell it or take a small bite.

Also read: Australia has 30,000 new millionaires

Always opting for the senior discount


Many businesses offer discounts for older adults.

But often these special rates aren't that special and seniors would be better off taking advantage of other deals available to consumers of any age.

For example an annual pass to a series of events in an Australian city, is better value than buying seniors' discounts to each place.

Not adjusting the thermostat

Don't waste money heating or cooling an empty house or apartment.

When you leave for the day, lower -- or raise, depending on the season -- your thermostat by several degrees.

You can save 5% to 15% (about $180 a year) by adjusting your thermostat 10 degrees to 15 degrees for eight hours.

Shopping at the wrong store

Sure, it's convenient to do all of your shopping at one place.

But if you buy your food, medicine, toiletries and paper products at the same store, you're probably spending more than you have to on many items in your shopping cart.

For example, you'll get the best deal on cleaning supplies, personal grooming items, greeting cards, gift wrap and bags at dollar stores.

Also check out Costco and Aldi - they have Coles and Woolies worried. And for good reason.

Paying foreign transaction fees

If you're traveling abroad, the fees you pay when using credit cards and getting foreign currency can add up quickly.

However, there are several ways to trim costs.

For example, credit cards tend to offer better currency exchange rates than exchange bureaus.

And be sure you use a card that doesn't levy a foreign transaction fee, which can cost 1% to 3% of every purchase you make on vacation.

If you need cash, wait until you arrive at your destination to get foreign currency.

Then go to a local ATM -- it is the cheapest way to get currency, often at a wholesale rate.

Carrying a balance

Debt is a shackle that holds you back.

For instance, if you have a $1,000 balance on a credit card that charges an 18% rate, you blow $180 every year on interest.

Carrying a balance can also cost you down the line in the form of a lower credit score that will trigger higher interest rates on your loans.

That's because your score is based, in part, on your credit utilisation ratio -- how much of your available credit you've used.

It's wise to keep your total ratio and the ratio for each credit line below 30% at all times.

Buying brand-name instead of generic

From groceries to clothing to prescription drugs, you can save money by choosing an off-brand over a fancy label.

And in many cases, you won't sacrifice much in quality.

Clever advertising and fancy packaging don't make brand-name products better than lesser-known brands.

For example, generic drugs can cost as much as 80% less than their brand-name alternatives.

The lower list price makes a huge difference when you're in your insurance plan's deductible period and paying the full price out of your pocket.

The coinsurance rates are usually lower, too -- often 10% to 15% of the cost for generics, 25% for preferred brand-name drugs, and 50% for nonpreferred brand-name drugs.

Paying late fees and missing deadlines

If you pay a stack of bills every month, it's easy to overlook one or two every now and then.

But if you miss a credit card payment by even one day, you will pay a late fee of $25 ($35 if it's the second time in six months).

Your credit score could also take a hit if you pay your bill late.

Your history of on-time payments accounts for 35% of your credit score -- more weight than any other factor.

If you pay the bill within 30 days of the due date, the lender might not report the delay to the credit bureaus.

But if you let the bill go longer than that, the card issuer is more likely to inform the credit agencies and turn over your case to its collections department.

If you have a good payment record -- especially if you have paid on time for an entire year -- call your card issuer and ask that the late fee be waived.

To avoid missing deadlines, set up payment alerts to be delivered by e-mail or a text message from your credit card company.

Buying insurance you don't need

You only need life insurance if someone, such as a child, is financially dependent on you.

That means most singles, seniors and kids don't need a policy.

Other policies you can probably do without include credit-card insurance (better to use the premium to pay down your debt in the first place), rental-car insurance (most auto policies and credit cards carry some coverage) and mortgage life insurance (a regular term-life insurance policy is more comprehensive).

Overspending on petrol and oil

There's no need to spring for premium petrol if the car manufacturer says regular is just fine.

If your car can use flex fuel -- a blend of 85% ethanol and 15% gasoline -- it still might be more cost effective to stick with regular gasoline.

Even though the average price of flex fuel currently is less per gallon than gas, vehicles get fewer miles per gallon with it because ethanol contains less energy.

And are you still paying for an oil change every 3,000 miles?

Many models nowadays can last 5,000 to 7,000 miles between changes, and some even have built-in sensors to tell you when it's time to change the oil.

Check your owner's manual to find the best time for your car's routine maintenance.

Keeping unhealthy habits

Smoking costs a lot more than what you pay for a pack of cigarettes. It kills you and drains your back account at the same time.

Seek free help if you need assistance quiting.

Paying too much for a mutual fund

Mutual fund fees can weigh down performance.

The average mutual fund expense ratio is 1.08%.

If your fund isn't beating its benchmark, you're better off buying a low-cost index fund or exchange-traded fund that matches the benchmark.

For example, you'll pay an annual expense ratio of just 0.05% to invest in the Vanguard Total Stock Market ETF (VTI), which tracks the CRSP US Total Market Index.

On a $50,000 investment, that's a savings of more than $500 per year over the average managed fund.

It is possible to outperform a benchmark with a well-managed fund (although it's not guaranteed). Stick with no-load funds, which can save you more than 5% in sales charges.

Passing up tax breaks

There's a good chance you're among the millions of taxpayers who overpay taxes each year by overlooking deductions to which you're entitled.

Failing to maintain a file of tax receipts throughout the year, rushing to file your taxes at the last minute, and fearing an audit are all reasons that may keep you from claiming perfectly valid deductions.

That money is yours. Just be sure you have the documentation to prove it.

Opting for a low insurance deductible

A low deductible may seem appealing as you ponder a costly claim down the line, but you'll pay a lot more in higher premiums.

Boosting your deductible from $200 to $500 can reduce your collision and comprehensive car insurance premiums by 15% to 30%; raising it to $1,000 can save you 40% or more.

If your homeowners insurance deductible is $500, increasing it to $1,000 can lower your premiums by up to 20%.

Besides, when you have a low deductible, you might be tempted to file claims more frequently for small amounts.

Insurers don't like frequent claims on your record and can punish you with higher rates.

Before raising your deductible, however, make sure you have enough cash in your emergency savings account to cover it if you ever file a claim.

You won't have to rely on costly credit cards to bail you out.

Leaving your money in a low-interest account

If you're stashing your cash in a traditional savings account earning next to nothing, you're wasting it.

Make sure you're getting the best return on your money.

Search for the highest yielding accounts.

Paying ATM fees

Expect to throw away $2-2.50 every time you use an ATM that isn't in your bank's network.

That's because you'll pay an ATM surcharge, and your own bank will hit you with a non-network fee.

Consider switching to a bank that charges lower ATM fees and reimburses you for fees other banks charge.

Another way to avoid fees if there's not an ATM in your bank's network nearby is to get cash back when you make a purchase at the grocery store or drugstore.

Not pulling the plug on electronics

Aussie households waste $100 a year, on average, to power devices while they are off or on standby mode.

Electronics that have a clock or operate by remote are typical culprits.

The obvious way to pull the plug on your energy vampires is to do just that -- pull the plug.

Or buy a device to do it for you, such as a Smart Strip Power Strip, which will stop drawing electricity when the gadgets are turned off and pay for itself within a few months.

Paying full retail price

Considering that most consumer goods go on sale at various times of the year, there's little reason to pay the full retail price for something.

Plus, you can always use sites such as PromotionalCodes.com to find coupon codes to score a discount at the checkout when you shop online.

Sticking with the same service provider

Hey, we're all for loyalty to trusted service providers, such as your bank, insurer, credit-card company, mutual fund, phone plan or cable plan.

But over time, as prices and your circumstances change, the status quo may not be the best deal anymore.

For example, drivers overpay an average of $368 a year to insure their vehicles because they don't shop around for the lowest rates, according to a study by NerdWallet.

So it's worthwhile to check at least once a year to see if other service providers can offer you better rates.

Buying new instead of used

Many pre-owned items can cost up to 50% to 75% less than the price you'd pay if you purchased them new.

Often you can find "used" goods that have hardly even been used.

And with some items -- such as tablets and smart phones -- retailers or manufacturers refurbish and repackage them so they're practically new again.

Of course, there are some things you're better off buying new, including mattresses, linens, shoes and safety equipment, such as car seats and bike helmets.

Or you could save money by borrowing something from friends, family or neighbors, or using an online sharing resource.

Paying credit card annual fees

A great rewards-card offer may strike you as worth the annual fee of $50 or more.

However, there are plenty of rewards cards without an annual fee.

Look out for the best cash-back,travel, gas and retail, and airline rewards cards -- many of which don't have an annual fee (or the fee is waived during the first year).

Saying yes to rental car add-ons

When you rent a car, the fees can add up quickly.

One of the heftiest fees can be rental car insurance, or collision damage waiver, which can cost $20 to $30 a day.

Rental car agents are trained to make this insurance sound nonnegotiable, but you probably don't need it.

If the car is for personal use and you have collision coverage on your auto policy, you're covered. (Your credit card may pick up the deductible -- or become your primary coverage if you don't have any other insurance.)

There are plenty of other charges for add-ons, such as a GPS, which typically costs $13 a day.

Bring your own. And think twice about paying for a full tank of gas ahead of time. You can fill up cheaper yourself, and you may not use a full tank anyway.

Paying for warranties

Appliance and electronics salespeople will sell you on a product's merits and, after you commit, badmouth it so you'll also buy a service contract. Don't bite.

Thirty-one percent of consumers buy extended warranties each year, according to a study by the University of Maryland's Robert H. Smith School of Business.

Typically, you'll pay 10% to 20% more for an item to extend a one-year manufacturer's warranty through the fifth year of ownership, according to the Service Contract Industry Council.

Odds are you won't need the extra coverage because most major appliances don't break down during the extended-warranty period.

Or you might already be covered. The four major credit card networks -- Visa, MasterCard, Discover and American Express -- provide up to a year of extended warranty protection for some cardholders, according to credit card comparison site CardHub.com.

Not planning weekly meals

It's hard to make money-smart meal choices when you're rushing at work or at home -- or both.

Without a weeklong plan, you risk wasting money at the grocery store or on fast food.

By developing a menu of easy-to-prepare meals, you won't overspend at the grocery store by buying things that you don't need or that will just go bad in your refrigerator.

And if you have food at home that can be quickly turned into meals, you'll be less tempted to stop at a fast-food joint, which isn't nearly as cheap as it seems.

A family of four can easily spend more than $20 on a fast-food meal, but they can prepare a meal at home for significantly less.

Paying too much for shipping

If you do your shopping online, you often can avoid paying for shipping by having your purchases shipped to a retailer's brick-and-mortar store or by taking advantage of free shipping promotions.

Some retailers offer free shipping all the time, seek them out!

Going overboard on parties

Whatever happened to inviting the neighborhood kids over to your house for birthday cake, ice cream and a few games?

Now families are spending hundreds – even thousands -- of dollars on over-the-top birthday party venues, catered meals and elaborate gift bags for each guest.

The truth is that most kids just want to spend time with friends playing games, opening a few gifts and indulging in a little junk food.

So resist the urge to spend more than necessary.

And then there are weddings. Don’t get us wrong: We love weddings.

We just don’t like the nearly $30,000 average bill that accompanies couples down the aisle.

Starting your newlywed life under a crushing debt load is a bad idea. Rein in your wedding costs and do your marriage a favor.

(And don’t foist that outrageous price tag on your parents, who are trying to save for retirement and may have just helped you pay for your education.)

 Source: Kiplinger