Most people will tell you they’d like to save more money. Yet we all spend money on things that don't add value to our lives, either accidentally or unconsciously. The reality is, if we want to save more, we need to spend less.
Here are five key things you can reduce from your expenses that can really add up.
1. Bank account fees
Paying bank fees, ATM fees, statement fees, and overdraft fees may be unnecessary because they’re usually avoidable. Bank fees can even drain an account down to nothing if you’re not paying attention. Are you paying fees — paying banks to take your money? If so, you may be able to eliminate them through either changing the type of account you have, adding an automatic deposit, or switching institutions. Charges of $10–$20 a month can accumulate to large amounts over time.
2. Credit card costs
Annual fees, late fees, statement fees, and interest charges are another way unnecessary costs can add up.
That doesn't mean credit cards don't have valid uses — convenience, emergencies, to earn cash back or airline miles. The list goes on and on. Also, if you take advantage of the perks associated with your specific credit card, a higher annual fee may provide benefits you may not have had access to otherwise. However, you should pay attention to the timing of your account and pay your full balance off each month before interest is charged, if possible. If you have a high-interest credit card, see if better offers may be available.
3. Redundant home entertainment
A lot has changed with streaming entertainment options. It may be a good time to consider — what am I currently paying for, what services do I use the least, what's redundant, and do I need all these options? In some cases you may even have duplicate subscriptions of the same service.
Consider what may work best for you. Most people who leave cable never go back. Analyze what services you're spending money on and if it may be time to move on from some of them, which can add up to real monthly savings.
4. Spending to save
Don’t fall for marketing schemes that get you to buy things you don't need just because they are on sale!
“Free shipping — today only!” “Buy one, get a second half off!” Did you really need or want that second pair of shoes or the online purchase you weren't going to make until you saw the free shipping deadline expiring?
If reining in your spending habits is a challenge, you may need to reassess what it is that you're purchasing.
5. Frequently going out to eat
Splurging on food and drinks is another common way people spend money. Twelve-dollar designer coffees, $20 lunches, happy hour drinks, or takeout may be eating up a huge portion of your income.
Bring coffee or lunch from home. Limit the number of meals you eat outside of the house. While it’s okay to treat yourself and going out to eat shouldn’t be entirely cut out, by making conscious changes you could save hundreds of dollars a month.
Key learning to follow
Deciding what constitutes the important or valuable ways you spend money is a very personal decision. What is a waste of money to one person might be completely worth it for another. Do what works best for you, but remember these rules of thumb for successful budgeting:
Spend less than you earn.
Save money — consistently and automatically.
Align your spending with your values, to leave yourself satisfied with how you spend your money.
Don’t spend money on silly habits.
Talk to a Park Avenue® Wealth Management financial advisor about how you may be able to implement these key learnings into your financial portfolio.