It's OK to spend a little extra money once in a while, whether it's to take a vacation, upgrade an electronic, or even buy your dream home if you've saved well enough for it. But there comes a point when wasting money can hurt your finances and compromise your ability to meet other goals, whether it's retiring comfortably or putting your kids through college.
As such, it pays to take a step back and evaluate the different things you're spending money on. And chances are, you'll find that you're going overboard in these three areas in particular:
1. Restaurant meals
The typical American spends $288 a month, or $3,456 a year, on restaurant meals and food prepared outside the home. Seeing as how dining establishments typically charge a 300% markup, that means you could save yourself $2,592 a year by cooking your meals at home rather than paying someone else to do that for you. Cooking at home might also result in healthier eating habits, thereby saving you some money on healthcare expenses to boot.
2. Credit card interest
Americans spend an estimated $855 on credit card interest each year. Given that 39% of U.S. adults have less than $400 on hand for emergencies, that's a lot of money to be throwing away.
If you're carrying a hefty credit card balance, paying it off is your ticket to wasting less of your hard-earned salary. And if you can't pay off that debt in a reasonably quick time frame, try making it more affordable to lower your interest costs. You can do so by transferring your existing credit card balances to a new card with a lower interest rate or taking out a personal loan with a lower interest rate and use it to pay off your credit card balances. Then pay back that loan as soon as you can.
3. A new car
It may be nice to drive around town in a new vehicle, but cars lose a huge chunk of their value the moment you drive them off the lot. As such, a used car is really a more economical bet, especially if money is at all tight in your household.
The average price for a new car was $37,285 as of June 2019, according to Kelley Blue Book. On the other hand, the average price for a used car was $20,200 for the first quarter of 2019, according to Edmunds. That's a difference of more than $17,000.
Spend your money wisely
Chances are, you don't have access to unlimited funds. Rather, you have to work hard and hustle to earn your money.
With that being the case, it pays to reassess your spending and pinpoint the ways you're effectively flushing your money away. That way, you can start making lifestyle changes that allow you to waste a lot less, save a lot more, and buy yourself the financial peace of mind you deserve.