Money is an important element for living a prosperous life.
And in the event of the COVID-19 pandemic where jobs are continuously lost and there is a time of business and economic recession.
- Worldwide people loosed 225 million jobs in 2020
- In the US alone people loosed 26 million jobs
- The global economic crisis may take around 5 years to recover according to the World Bank Chief Economist.
Here are some devastating statistics:
That’s why along with knowing how to manage your money and expenses effectively, it is also important to know how to stop wasting money.
In this article, you’re going to learn 12 tips on how to stop wasting money to save more and easily fulfill your financial needs.
What does it mean to waste money?
There are different definitions of wasting money.
The two definitions from the dictionary:
- Money spent for inadequate returns
- The bad use of money
It is simple and clear.
But if you want a more elaborated understanding of what is the real meaning of wasting money here is the one from me.
Wasting money is using your money in such a way that it doesn’t give fair benefits. It can be any investment or spending but in an unuseful way.
If you invest money in a certain opportunity where you’re not generating enough return on investment then it is also considered a waste of money. For example, saving accounts. I will discuss it later below.
Other than spending your money on unessential things which you don’t use or take advantage of, it also falls into a waste of money. For example, unwanted entertainment, showing off to society, and purchasing things just to satisfy your impulses.
I think now you have a clear understanding of what is called wasting money.
So let’s dive into why you don’t do this.
Why should you not waste money?
Wasting money is a poor and bad financial habit. But fortunately, most people are stuck in this. So let’s have a look at some of the reasons why you shouldn’t do this.
- It will cost you more than what you need for spending to satisfy your monthly or yearly expenses.
- Gives you tension and even depression if your income is less and you get scared of where your money goes. Because sometimes you don’t take into account this wasteful spending.
- You can build an emergency fund or retirement fund by saving unwanted spending and cutting out useless expenses.
- Blocking this leakage of money helps you get a real picture of necessary expenses and how much you need to earn for a prosperous life.
- Using your money in an advantageous way makes you financially smart.
Above are some reasons that deny spending that counts towards wasting money.
Now I’m going to show you statistics on how much money is going to waste. And after this section, I will explain the ways how to stop wasting money.
RELATED POST: Rich vs Wealthy: 13 Tips On How to Become Wealthy
What are some statistics about wasting money?
These statistics are of Americans so that you get an idea.
- Americans waste $18,000 a year on useless things which comes down to around $1500 a month. Imagine the benefits of saving that much money.
- Most of their money is wasted on nonessential luxury items. Holding them back from spending on other essential items.
- Due to this reason, 38% of Americans aren’t able to invest in retirement funds, 28% aren’t able to pay back credit card loans, 35% can’t buy an insurance policy, and 26% aren’t able to pay for car repairs.
- It doesn’t stop there. In fact, this habit leads to 60% of adults do not have enough money in an emergency to pay $1000 in expenses.
Another survey of 1015 individuals found that 95% of them waste more money compared to the optimal level.
If you’re a person like that then stop. Wasting that much money is a poor financial habit. Especially, when you’re not a big business owner or crazy rich. As a normal person doing some kind of job or a small sole proprietor business with limited income, then make yourself strong. And you only need to block these leaks by following certain financial tricks.
The next section comes where I will share 12 tips that will really help you.
RELATED POST: How to Create a Personal Budget [ 6 Easy Steps]
How to stop wasting money? 12 Simple tricks
Here is a brief explanation of 12 ways to stop wasting money and save more:
1. Utilize budgeting
I kept budgeting as the number one tool how to stop wasting money.
Because budgeting tells you where your income is coming from? How much is it? Where is it going to spend in the future? How much budget is needed to satisfy future expenses?
This will help you get an idea of your income power to satisfy your expenses.
But as a tool, its benefits are not just limited to the overview of your income and expenses. It also helps you:
- Cut out nonessential expenses
- Control your expenses
- You become financially more confident
- Identify which expense to prioritize
- You stay organized and become financially smart
But unfortunately, most people ignore the importance of budgets.
In the United States, 75% of people don’t do any budgeting according to the 2019 survey of Debt.com. This leads to 65% of people don’t know how much they’ve spent in the last month so they regret lots of bad spending.
There is no difficulty or rocket science in making a budget.
Just use a simple spreadsheet in Google or take the help of any online application or financial software. Include all the details of income and expected expenses and update them month to month to adjust changes.
If you want more information about how to make a simple budget then here is a comprehensive post.
RELATED POST: How to do Zero-Based Budgeting Using 5 Simple Steps?
2. Use coupons and discounts
Shopping is a habit we all have. And if you’re like me you do shopping also.
But did you know while spending on your shopping needs whether it is new season shoes, clothes, makeup material, or anything else you can actually save money?
Next time look for coupons and discount opportunities at respective shops. If they are available, take full advantage of them. And in case they aren’t then ask for discounts from retailers on whatever you buy. This helps you pay less instead of paying full price if you don’t ask for a discount.
This way you can easily save up to $500 on a single shopping depending on how much material you purchase. Don’t forget to try it.
3. Pay in cash or debit card
According to Statista, the majority of Canada, the USA, and other first-tier countries publicly use credit cards to pay for their purchases.
Because the people feel flexible to pay with it.
With these benefits, there is a big flaw attached to using credit cards. And that is the fee and interest you pay to the bank. This means you pay extra dollars for every purchase you make using your credit card.
What is the solution to it?
There are two ways to get out:
Pay using cash. I think holding a little cash for shopping next month isn’t heavier.
Debit cards directly deduct money from your bank account with little fee (you also get discounts up to 20 and 40% for using a specific bank card).
That way you pay what you incur on your purchase for those prettier jeans or 40 inches LED.
RELATED POST: How to Avoid Debt to Make Yourself Financially Strong
4. Avoid social comparison
There are three main categories of people with respect to financial division.
- The first ones include billionaires like Bill Gates, Warren Buffett, and Mark Zuckerberg as well as other millionaires. These people have huge money so they can afford anything. Their assets and income are so huge compared to personal expenses ( nearly equal to zero).
- The second one includes the middle class. People who earn from jobs or any side business to cover expenses and save a little.
- The third one includes the poor. People with so little income can’t afford to pay their expenses. Even sometimes the most necessary expenses on which their life depends.
But there are some problems with the people falling into the second two categories. And that is comparing themselves with financially stable people to look like them.
As a result, they get addicted to showing off.
To look rich and prominent they overspend money as compared to what they earn. This includes taking heavy mortgages from banks to buy a prettier house, buying an expensive car at least, eating in 5-star restaurants, and more other likewise.
This waste of money leads them to financial troubles like compiling huge debts and finally declaring bankruptcy.
That’s why I’m against these bad financial habits.
No one cares how you look.
Live your life according to what you have and instead of looking at how rich people live, you should keep paying attention to improving your condition.
If you want to buy an expensive car then first find ways to make more money so you can easily pay for it. Just use a little financial intelligence. I highly recommend you to read Rich Dad Poor Dad to increase your financial knowledge and wisdom.
5. Change your house
Living in a big house is everyone’s dream.
But that kind of dream is not suitable for everyone.
If you’re living in a big house and paying lots of rent which feels expensive to you then changing house is a better option than wasting money on rent.
As housing prices are rising, rents are also hitting the sky. And in the event of a pandemic like COVID-19 majority of people can’t afford to pay big rent.
So if you’re living in a rented house with big rent then try to search for another house.
Analyze your family size and try to go to a house or apartment where there is a fair rent you can afford. Likewise, if you have a house of your own that needs lots of wear and tear and decoration expenses as well as incur utility bills then just sell it for a profitable price and buy another small one that fits your needs.
If you use a house as the biggest asset then it is not always. This depends on your income level. For example, getting a mortgage for buying a house. If you can pay it easily using your monthly income then well and good. In this case, it is considered an asset but if not then it is a big expense.
Do you want more information on saving money on a house? Here is a full post of 101 ways to save money around your house.
6. Prepare food yourself
Food is a major household expense. And a significant amount of your disposable income is spent on food items each month.
According to 2019 statistics Americans spent 9.5% of their income on food expenses. Out of this 4.9 percent of food is prepared at home while the other 4.6% of food is eaten outside.
It is amazing that food expenses are decreasing over time as household income rises.
But still, meals and other food that you prepare at home is far cheaper than eating outside.
According to value penguin, the average food expense of Americans is $6,602 a year. Which is divided like this:
- Food at home is $3935 and;
- Food away from home $2667
And if you subdivide these food expenses then the scenario looks like this:
Now how much it is costly to eat outside as compared to home food?
Here is what Journey Food data shows.
- The average expense per serving outside is $20.37 as compared to $4.31 for at-home meals.
From these statistics, you can analyze how much money you’re wasting if you eat outside.
If you take the above amount of money into consideration then you can save around $2100 a year. For sure big bucks.
But still, in case you really want to eat outside then go for it. Here the main point to stress is that without any need don’t go for eating outside instead with a little effort prepare the same food at home which is more hygienic and less expensive.
7. Downsize branded purchasing
Branded products are preferred more as compared with non branded.
According to statistics, 64% of consumers make a purchase from a certain brand when they watch their videos. 72% of people purchase something from a branded company if they follow that company on Twitter.
There is a dark side to these branded products. Which is charging huge money.
The reason is brands spend a huge amount of money on advertising and promotion. This adds up to their product’s original costs and the burden is placed on the end consumer’s pocket. While the material they are made up of is usually generic.
The 2018 data shows that branded generic products were 13 times more expensive as compared to non-branded generics. And 21% of these branded products were made up of material that is generic.
What you can do is cut down on the extensive purchasing of branded products. In my opinion, most of the non-branded products areas like or better than branded ones.
Another good strategy to stop wasting money on brands is to buy when their products go out of season. Because at that time for selling all the materials big brands offer huge discounts and coupons.
RELATED POST: How To Pay Off Debt Fast (11 Bullet Proof Tips)
8. Don’t pay for DIY
There are multiple little tasks you face at home that you can do yourself. Like a little decoration of a home, a small repair of a car, cutting out leaves in the garden, cooking food, and many more like that.
They come multiple times a year.
Instead of hiring an outsider to do them for you in exchange for money. You can save a bunch of money by completing them yourself.
And you really enjoy these tasks if you do them yourself. Honestly.
9. Avoid nonessentials
The number one trick in this list is to utilize budgeting so you can control your finances. Which also helps you to crack down on nonessential items.
Shopping and purchasing occur frequently during a month. And obviously purchasing things essential to living are compulsory.
But most people make mistakes. Which is buying nonessential items.
These are usually the result of impulse or emotional purchases.
Nonessential items come in different ways.
For example, if you see a pretty dress in a boutique and you can’t stop to buy it even if you don’t need it but just due to its beauty and color. Other than that if there is a sale going on and you purchase things in bulk like clothes, shoes, makeup products, or any other kind of fashion-related things.
So what you can do is to think before purchasing them or before going to purchase, make a list of items you need, and then follow it strictly.
Americans spend $18,000 a year on non-essentials.
You can imagine how much waste of money it is. If you don’t do that you can have $18,000 plus in a bank account saving at the end of the year. You can then use that money for an emergency fund and investment to grow more.
10. Stop unwanted entertainment
Entertainment is necessary to make yourself feel better and relax your mind.
You can entertain yourself at home using audio and video equipment or go outside of your home to dance clubs, museums, beaches, etc.
In the United States, people spend $7.3 billion each year on home entertainment.
A whole lot of money.
The average American spends around $200 a month on entertainment which adds up to $2400 a year.
Entertainment is good but blindly spending money on it without a plan is a waste of money.
What you can do is prioritize your important expenses first. And then make a budget for entertainment from what is left at the end.
For example, you can organize your expenses like this:
- Utility bills
- Daily traveling expense
- Credit card payments
- Emergency and retirement saving
Then allocate a specific expected amount of money to each expense. This way you pay yourself first and what is left you can use for entertainment.
For more information on entertainment here is an article from My Bank Tracker ( Are You Spending Too Much Money on Entertainment?)
11. Don’t save too much
This is the biggest mistake most people do with their money. This not only wastes your money but eats it out with time.
People save too much in their bank accounts in the hope of earning interest.
But do you know the banks are making you poor this way but rich themselves?
Why? Here is the answer.
Banks pay you interest too less than what is the inflation rate in the economy. That means you’re earning too little than the rate of devaluation of your money is.
If you currently take the example of the United States then the banks are offering less than a 1% annual savings rate while the inflation is more than 2% due to the COVID-19 pandemic.
This means you’re actually losing a lot of money just by saving.
So what you can do instead is to find investment opportunities that pay more.
It’s that simple.
It is normal that you may need to face risk in some investment opportunities but obviously, it will give you a return as well.
Some good investment opportunities include:
- Cryptocurrency, stocks, and derivatives ( but before diving take some knowledge of trading and investing align with that don’t invest all of the money. (Invest what is extra)
- Small business as a side hustle like a retail store in your town
- Mutual funds, government securities, and bonds
- Online businesses like blogging and digital marketing
- Mutual funds and retirement plan
This will not only help you earn higher returns but also convert inflation and taxes. You can also be able to cure your expenses so easily.
12. Learn financial basics
Finally, last but not least. The most important tip that is heavier on all the previous eleven is getting basic financial knowledge.
You must learn basic accounting knowledge like understanding and interpreting the financial statement. Get your hands strong on what really means by assets, expense, liability, and equity. What items fall in each one of them?
The reason is most people make the mistake of considering liabilities as assets or expenses as assets. That results in wasting money on wrong decisions due to a lack of understanding.
If you want to get your financial IQ hit the sky then I recommend you should read the rich dad poor dad series by Robert Kiyosaki. Also, watch his YouTube videos.
These books will tell you the real financial knowledge that builds your wisdom and help you understand how money actually works.
You also get to understand what rich people do to get out of financial trouble and avail financial freedom in their life. Also, what mistakes poor and middle class do which get them into financial trouble?
RELATED POST: 15 Personal Finance Topics You Should Master In 2022
What are some important quotes about wasting money?
After discussing how to stop wasting money, here I’m gonna list down some related quotes for your inspiration and knowledge. They will help you get monetary wisdom if you read them with concentration.
So let’s start with number one.
“Money is a powerful force. don’t use it against you. If your self-discipline and financial intelligence are low, money will run over you. It will be smarter than you to take over your life.”
― Robert Kiyosaki
“People never forget two things, their first love and the money they wasted watching a bad movie.”
― Amit Kalantri
“Not wasting money is the best way to save money. We usually save money to waste it.”
― Mokokoma Mokhonoana
“Spending money to show people how much money you have is the fastest way to have less money.”
― Morgan Housel, The Psychology of Money
Some important questions people often ask about wasting money
What is the biggest waste of money?
It depends on what non-essentials you’re spending your money on and how much. Normally spending on alcohol, cigarettes, branded clothes, and unwanted parties I think is the biggest waste of money.
But it varies from person to person. Some exhibit these habits and others don’t.
Can spending money be an addiction?
Not for everyone. But some people may have shopping addictions like oniomania in which they spend excessive amounts of money to shop for nonessentials that they regret afterward. And other than that the majority of people spend money based on emotional decisions.
For example, when they see their favorite Hollywood actor wearing a specific brand of jacket or jeans it compels them to buy.
How to stop wasting money on cars?
You can easily stop wasting money on cars just by avoiding unnecessary purchasing. Use the existing car for a reasonably long period of time before purchasing the next. Along with that drive, cars carefully and give them the needed wear and tear along the time. So your car doesn’t get obsolete in a short period of time.
What can I do that is fun and cheap?
It depends on your choices. But if I share my story then I like to read books, play games, sports like cricket, football, and travel to local picnic places. I also go to museums to get a feel of ancient times as well as parks. And to me, all these activities not only provide lots of fun but also need little to no money.
Is buying coffee a waste of money?
Not every time. But I suggest you make a coffee at home instead of buying daily from the shop at the end of your town.
Purchase a bag of beans and a coffee maker (which is a one-time investment) to prepare at home. If you drink multiple times in your office then you can also do the same for that. It helps you get a hot coffee so cheaply as compared to spending $5 to $10 buying it outside.
How to stop wasting money on house rent?
The rents are so expensive. But still, there are some ways you can afford them or stop money straight away waste them.
Some tips I can recommend you include:
- Get a roommate if you’re a student to share the monthly rent
- Pay upfront some of the amounts when you’re signed the initial contract
- Negotiate the prices and get a discount
- Search for a low-rent apartment that is in your income affordability
To get more information here is the full article: 10 ways to save money on monthly rent payments.
How can I stop wasting money for 30 days?
I recommend you follow the above-discussed tips. Make a budget for the next 30 days while stopping unwanted entertainment, vacations, shopping, and parties. This will help you stay away from branded stores and hold yourself at home.
Place your credit and debit cards aside so you don’t make a purchase online while you’re searching the internet. Apply them and I’m sure you can easily stop yourself from wasting money for the next 30 days.
So you learned the tips and tricks on how to stop wasting money.
Now let’s take a quick look at what tricks you’ve learned.
- Utilize budgeting to keep track of your expenses
- Use coupons and discounts to save on purchases
- Pay using your debit card or in cash
- Avoid social comparison and show off
- Change your house to avoid paying extra costs
- Prepare your food and avoid eating outside
- Stop branded purchasing and go for non-branded ones
- Don’t pay for do-it-yourself work at home
- Think before buying the non-essentials to spend wisely
- Stop unwanted entertainment and prioritize your expenses
- Don’t save too much in the bank instead invest it
- Learn the financial basics to increase your IQ
Do you like any of the above financial tricks?
Please don’t forget to share on social media.
OTHER HELPFUL POST:
- 73 Easy Online Jobs to Make Money From Home - December 6, 2023
- How to Track Amazon Order From Someone Else (4 Quick Ways) - November 26, 2023
- How Late Does Amazon Deliver? Amazon Shipping Hours (2023) - November 17, 2023