With inflation driving up the cost of almost everything, it’s more important than ever to keep track of where your money is going.Even the most frugal consumers may find themselves spending more than they need to on certain expenses over time.Here are few common money traps, as well as tips on how to avoid them.
Things You are wasting money on
According to a Chase study published last year, more than 70% of consumers waste more than $50 per month on recurring payments for items they don’t need or want. According to Julie Ramhold, a consumer analyst with DealNews, one reason for this is that people frequently sign up for free trials and then fail to cancel when the trial period expires.
“These things are put on autopay, and people don’t realize they’re paying for something they don’t even use,” Ramhold adds. “That’s a simple way to throw money away.”Reduce waste: Even if you have your credit cards set to autopay (a smart way to avoid late payment fees), carefully review your monthly statement and cancel any charges for items or services you don’t use.
Food waste is Never Eaten
According to the Natural Resources Defense Council, up to 40% of food in the United States is never eaten. While your family’s food waste may be lower, we’re all guilty of having to toss wilted salad greens or leftovers brought home from a dinner out.Save money by going through your refrigerator before going to the supermarket. Then, base your meals (and shopping list) on what you already have. You’ll not only be sure to use those items before they spoil, but you’ll also be less likely to buy new groceries that go to waste.
Credit card interest
According to the Consumer Financial Protection Bureau, high-interest debt and credit card fees cost American households an average of $1,000 per year. When you carry a balance on your credit card, it becomes an expensive burden that can drag down your finances.
Reduce waste: If you are in debt, prioritize paying down your existing balance and putting your credit cards on hold for the time being. “If you have a credit card debt problem, it’s probably a good time to put the card away and use the cash method or a debit card instead,” Ramhold advised.
Bank fees for withdrawing money
Whether it’s fees for using an out-of-network ATM or monthly service fees for simply having a checking account, small fees can add up to a significant amount of money wasted over time. According to a Bankrate survey, the average monthly fee for non-interest checking accounts (excluding free checking accounts) was just over $5 last year, while the fee for interest-bearing checking accounts was more than $16 for those who did not meet the requirements to waive the fee.
Change banks to save money. According to Bankrate, nearly half of checking accounts have no monthly maintenance fees. If you are unable to avoid monthly fees with your current bank, the cost of those fees will most likely outweigh any interest earned on that account. There’s no denying the rush you get when you find an item for a fraction of its normal price. However, buying something you don’t need simply because it’s on sale can quickly lead to overspending.