Big Money Wasters

Everyone wastes a little money here and there. The trick is to not waste a lot of money.

Forget to cancel a subscription or fail to get gas where it’s cheaper, and you’re out a few bucks, but ignore some big money wasters and your finances can really take a hit.

The Wall Street Journal surveyed several personal finance experts, authors, and even a Nobel Prize winning economist, to find out what they considered big money wasters.

The first one they named is something they called “compensatory purchases.” That’s a fancy name for “keeping up with the Joneses.” It’s anything you spend money on to make other people think you’re successful. In reality, you’re doing it because you don’t feel successful.

Compensatory purchases would include luxury goods and high end clothing with visible logos to indicate you have money and status. The experts said these can include small-ticket items purchased over and over, such as designer coffee.

Another big ticket money waster, perhaps the biggest, is buying too much house. One of the experts explained that peoples’ thinking about big houses hasn’t caught up with technology that enables us to live comfortably with less space.

Take large, elaborate kitchens, for example. Readily available prepared foods have made them obsolete. But what the experts didn’t say is that pre-packaged food items can also be a money waster.

Another example of buying too much house is having a rarely used room, an extra bedroom that sits empty most of the time, or the workshop in the basement gathering dust, or space for bookshelves when we have e-books that take up no space at all, although maybe it’s not as much fun to curl up with a Kindle.

For one expert, a big money waster for many people was buying a new car, especially if you’re just trying to impress someone. You’ll have to work 2 to 3 months out of the year just to make the payments and insurance. A better option for many people is a dependable late-model vehicle with low mileage.

If you simply must have that “new car smell,” you can buy it in a can and make any car smell brand new for around $10.

Keep in mind, however, that buying a new car is fine if you can afford it and plan to keep it for many years, especially if you can buy it with cash. If no one bought new cars, we soon wouldn’t have any cars at all.

Of course, with today’s high interest rates, and sky high car prices, it’s more important than ever to buy a car for practical reasons, such as affordable, dependable transportation.

The next potential money waster is touchy for many parents. It’s spending money on adult children for things they should be paying for, such as keeping them on your car insurance or cell phone plan. If you no longer need a family plan and an individual one is cheaper, you’re just wasting money.

The experts also mentioned overscheduling younger children with too many expensive activities. It’s better to have the kids focus on one or maybe two things they really enjoy because the cost of extracurricular activities, and transportation to them, continues to rise.

You also should avoid getting a gym membership unless you’re absolutely sure you’ll use it. Otherwise it’s just another money waster. Having an unused gym membership has been described as “the failure to recognize future laziness.”

Another money waster is unplanned trips to the grocery store. That’s when you go in thinking you just need to grab one item, and you end up spending $100, which these days fits in two or three bags.

Also mentioned were pre-packaged sugary snacks that could easily be replaced with something less expensive like an apple— better for your wallet and your waistline.

We all have to watch our spending to be good stewards of what God has entrusted to us. Proverbs 21:10 reminds us, “Precious treasure and oil are in a wise man's dwelling, but a foolish man devours it.”

You can also listen to the related podcast on this topic.