By Beth Braverman
With inflation pushing the price of almost everything up, knowing how you spend your money is more important than ever.
Over time, however, even the most budget-conscious consumers may find themselves spending more than necessary on certain expenses.
Here’s a look at seven common financial pitfalls and tips for reducing those costs.
1. Bank charges
Whether you pay a fee to withdraw money from an out-of-network ATM or pay a monthly service fee to simply have a checking account, small fees can add up to a significant amount of wasted money over time. . The average monthly fee for interest-free checking accounts (excluding free checking accounts) last year was just over $5, according to a Bankrate survey, while fees for interest-bearing checking accounts were over $16. $ for those who did not meet the fee waiver conditions.
Cut waste: Change bank. Nearly half of checking accounts have no monthly maintenance fees at all, according to Bankrate. The cost of monthly fees, if you can’t avoid them with your current bank, likely exceeds the interest you receive on that account.
2. Sell items you don’t need
There’s no denying the thrill you get when you buy an item for less than its regular price. But spending money on something you don’t need just because it’s on sale can quickly lead to overspending.
Cut waste: The next time you’re tempted to buy something on sale, wait 24 hours before making the purchase. Often the initial excitement of getting a deal will wear off and you can walk away from the deal.
3. Subscriptions that you do not use
A Chase study last year found that more than 70% of consumers wasted more than $50 a month in recurring payments on things they didn’t need or want. One of the culprits for this, said Julie Ramhold, consumer analyst at DealNews, is that people often sign up for free trials and then fail to cancel when the trial period expires.
“These things are put on autopay, and people don’t even realize they’re paying for something they’re not even using,” adds Ramhold. “It’s an easy way to throw money out the window.”
Cut waste: Even if your credit cards are set up for automatic payment (which is a smart way to avoid late payment charges), review your statement carefully each month and waive any charges for items or services you don’t. not use.
4. Food waste
According to the Natural Resources Defense Council, up to 40% of food in the United States is never eaten. While the amount of food your family throws away may be less, we’re all guilty of having to throw away wilted salads or leftovers brought home from a restaurant dinner.
Reduce costs: Look in your refrigerator before going to the supermarket. Then plan your meals (and your shopping list) around the items you already have. That way, you’ll not only be sure to use those items before they go bad, but you’ll also be less likely to buy new groceries that go to waste.
5. Extended Warranties
While extended warranties on your car, appliances or other electronics can offset the cost of future repairs, they’re not always a good deal for consumers, according to Ramhold. Sometimes the cost of the plan will exceed the cost of any potential repairs, or it won’t cover the problem you have, Ramhold said. Also, many credit cards include extended warranties for certain purchases, so you may have to pay for coverage you already have.
Cut waste: Rather than paying for an extended warranty, consider directing your extra money to an emergency account that you can use to cover the cost of repairs, should they arise. If you already have a fully funded emergency account, you may be able to skip this expense entirely.
6. Paying too much for insurance
Like most other services, the cost of home and auto insurance usually increases over time, but if you’ve been with the same provider for several years, you may want to shop around to see if you can find a better price.
“New customers get new customer offers,” said consumer savings expert Andrea Woroch. “You may be able to find a policy that offers the same or better coverage for less.”
Cut waste: Check online sites like Zebra.com or Policy Genius for insurance quotes. If you’re happy with your current coverage and provider, you may be able to use those quotes as ammunition in negotiations to get a better rate.
Other ways to lower your bill: Bundle auto and home insurance with the same provider or increase your deductible. By doing these two things, Woroch said she was recently able to reduce her insurance bill by $1,100 a year.
7. Credit card interest
High-interest debt and credit card fees cost American households an average of $1,000 a year, according to the Consumer Financial Protection Bureau. While credit cards can be a useful tool, they become an expensive burden that can weigh on your finances when you have a balance.
Cut waste: If you are in debt, focus on paying off your current balance and put your cards on hold for now.
“If you’re having a problem with credit card debt, now’s probably a good time to put the card away and use the cash method instead, or use a debit card,” Ramhold advised.
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