Some expenses in life are unavoidable. You need a roof over your head, a means of transportation, food, and healthcare -- all of these are non-negotiable.
But when we look at the typical American's budget, we're likely to find that a lot of it centers on non-essentials -- things like cable TV, subscription services, restaurant meals, and store-bought coffee. All of these things make life easier and more enjoyable, but cutting them -- or cutting back -- is certainly possible. And if more of us were to do so, our finances would look a lot healthier.
The Bureau of Labor Statistics estimates that the average American spends $5,442 a year on non-essential expenses. If you've been doing the same, but you're in debt or lacking in savings, then it's crucial that you start cutting back -- before you really set yourself up for financial ruin.

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You need that money for other purposes
There's nothing wrong with spending some money on life's modest luxuries. Without them, many of us would be perpetually bored and miserable. But there's a difference between allocating a small portion of your income to non-essentials and plunking down over $450 a month, or $5,442 a year, to cover their cost.
If you're without emergency savings -- which is certainly the case for the 34% of Americans who say they have absolutely no money in the bank -- then you really shouldn't be spending anywhere close to $450 and change per month on non-essentials until you have at least three months of living expenses tucked away in the bank. Without that cushion, you'll risk racking up costly debt the moment a large unplanned bill lands in your lap, or you lose your job and don't have an income for several months. And if you don't have retirement savings -- which is the case for the 46% of Americans who have no money at all in a 401(k) or IRA -- then you should be putting at least some of that money toward your nest egg rather than spending it freely on luxuries.
In fact, let's assume you're willing to cut that $5,442 a year in half. If you were to stash the remainder in your IRA or 401(k) every year for three decades and invest it at an average annual 7% return (which is a few percentage points below the stock market's average), you'd wind up with $257,000 in retirement savings.
The same holds true if you're carrying credit card debt. The longer you do, the more money you'll throw away on interest charges. But if you were to cut your discretionary spending in half, you'd chip away at your balances much quicker.
It's all about moderation
To be clear, no one should be expected to spend no money on non-essentials. Sure, streaming services don't fall into the same category as housing and healthcare, but there's a value in being entertained. What you should do, however, is spend in moderation if you're currently carrying debt and lacking in emergency and retirement funds.
Of course, if you're debt-free, have solid emergency savings, and already have a nice chunk of cash socked away for your golden years, then go ahead and keep spending that $5,442 a year. But for millions of Americans, that's not the case, and if you're one of them, a little more mindfulness on the spending front could really change your financial picture for the better.