You've probably heard it a few thousand times by now: It's the small, seemingly meaningless daily habits that can really add up over time. But if you're struggling to save a decent chunk for retirement, those same everyday practices could be to blame.
The solution? Change your ways, cold turkey-style. Here are five habits that may be costing you more than you realize.
1. Throwing out food
Not big on leftovers? Although eating the same meal over and over again may not exactly entice your taste buds, it'll work wonders for your budget. It's a sad statistic that American households collectively manage to waste over $40 billion in food each year. The average household throws out a good $640 in food annually, and according to a survey by the American Chemistry Council, 76% of Americans throw out leftovers on a regular basis.
If you're guilty of tossing old or unwanted food, consider how much that habit will impact your long-term savings. Say you're like the average family, wasting $640 a year in uneaten food. Over the course of 30 years, that's a grand total of $19,200 down the drain.
But wait -- let's say you were to take that extra $640 a year and invest it, earning a respectable yet realistic return of 8%. In 30 years, you'd be looking at another $78,937 to pad your retirement savings, which kind of makes leftover casserole not seem so bad after all.
2. Using your credit card
In some ways, using a credit card can actually save you money, especially if yours offers cash-back incentives for the things you're buying anyway. But unless you're prepared to pay your credit card bill in full each month, using it could translate into major interest charges that can really add up over time.
Let's say you rack up a $2,000 balance one month and can't pay it off right away. If your credit card charges you 12% interest, then you'll spend an extra $400 over the course of three years. Now imagine taking that $400 -- money that isn't actually buying you anything -- and investing it for retirement instead. At an 8% return, you'd be looking at an easy additional $4,000 over the course of 30 years.
3. Playing the lottery
Sure, playing the lottery can be fun, and at just $1 per day, it seems like a minor indulgence. But if you were to take that $365 per year and invest it for retirement, based on our same 8% return, you'd have an extra $45,000 after 30 years. Of course, this assumes you don't actually win the lottery, but since you're more likely to be struck by lightning or eaten by a shark, hitting the jackpot is never something you should count on.
It's no secret that smoking is bad for your health, but it can be downright fatal for your wallet. With cigarettes averaging $7.26 a pack, that one-pack-a-day habit translates into $2,650 each year. Guess what you could be doing with that money instead? If you put that $2,650 into a retirement account each year, earning an average 8% return, you'd have an extra $327,000 when you're ready to leave the workforce behind -- not to mention the fact that you'll probably be around longer to enjoy your hard-earned retirement savings.
5. Shopping online
Shopping online is extremely convenient, but unless you do it wisely, you could wind up overspending on a regular basis. When you shop online, you're more likely to buy things you don't need to meet certain thresholds for free or expedited shipping. Plus, since you can't use cash, you run the risk of racking up a credit card balance that you can't pay off at month's end and starts to work against you.
If you find that you tend to shop online out of boredom, then find a hobby that's not hazardous to your wealth. Take up knitting, or bake your way through that 200-page cookbook you got as a wedding present seven years back. Do whatever it takes to keep your hands occupied so that you don't waste money -- money you could otherwise use for more important things, like retirement.
They say old habits die hard, but if you're serious about saving for retirement, then it's time for your bad habits to meet their immediate demise. Besides, you can always replace those old habits with a more healthy and fulfilling alternative: logging on to your retirement account, checking up on your investments, and watching that balance grow.
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