10 Ways Americans Waste Money

Photo (cc) by Images_of_Money

According to the latest release from the Census Bureau, in 2010 the average American household income was $49,445. Adjusted for inflation, that’s about where it was 15 years ago. Even more depressing: The 2010 poverty rate in the U.S. is more than 15 percent – the highest since 1993 – that translates into 46 million souls.

Suffice it to say that, for many Americans, money is in short supply – which makes it all the more important to preserve the money that comes our way. Last week, Money Talks guest columnist Len Penzo explained how he wasted more than $1,700 a year. And he’s certainly not unique. In the video below, I cover a sampling of ways Americans waste money. Check it out, then read on for more.

You just saw five ways to blow money – now let’s recap, add more, and take the list to 10.

  1. Buying new. There’s no two ways about it – getting something in the original packaging often means paying twice the price. This mistake is most costly when it comes to cars, but it applies to many things: furniture, clothing, textbooks…the list is endless. So whenever practical, skip the stores and showrooms and choose thrift stores, yard sales, eBay, and Craigslist.
  2. Accepting initial offers. Many people pushing for a sale are willing to negotiate because they want your money as much as you want the product. In Confessions of a Serial Haggler, I explained how I’ve personally gotten discounts on cable service, hotels, doctor bills, and more. It never hurts to ask.
  3. Buying brand names. People are finally wising up to this one – generics have been gaining market share since 2006. While prescription drugs have the biggest price tags versus generics, the dollars add up at the grocery store too. In many cases, the only difference between generic and brand name is price. Can you really tell the difference between name-brand and generic when it comes to water, cleaning supplies, or spices?
  4. Buying a bigger home than you need. In 2001, Americans spent about 12 percent of their income on “residential and transportation energy,” but this year they’re projected to spend almost 20 percent. Living in a big house with unused rooms or bigger rooms than you need is like driving a stretch limo: You’re buying energy for unused space. A bigger house means more furniture, higher maintenance, higher taxes, and more time spent taking care of it. When home prices were rising, there was some logic to leveraging potential profits by buying the biggest. Now, however, that extra space is nothing but a cash drain.
  5. Paying interest. This should go without saying, but too few people get it. Borrowing money to live beyond your means makes lenders richer and you poorer. Using credit cards can be smart – unless you can’t afford to pay your balances in full every month. The only time you should ever pay interest: if what you’re buying has a decent chance of rising in value at a higher rate than the interest you’re paying to own it.
  6. Eating out too much. We recently wrote that Americans eat out about every third day, and offered some tips to save. But even if you drink water and take home half the meal, the cost per person is higher than cooking at home. Cut back on the dining and you’ll keep a few more dollars – and maybe lose a few pounds.
  7. Keeping unhealthy habits. Smoking a pack of cigarettes a day at $6 each costs more than $2,000 a year. The U.S. government estimates the actual cost is closer to $10.47 per pack, once you add in the medical expenses smokers will face, including insurance costs. Excessive drinking is also an expensive and destructive pastime, as is gambling. There are plenty of healthier and cheaper ways to use free time: See 26 Tips to Save on Entertainment.
  8. Paying for freebies. Why do we pay for things we could get gratis? From TV to travel – even housing – creativity and flexibility can often replace money. Check out two of our most popular stories: 10 Things People Buy They Should Get Free and 9 Best Ways to Get Free Stuff.
  9. Turning down free money. As I said in My 10 Dumbest Money Moves, if your employer is offering matching money for participating in your company’s 401k or other retirement plan, and you’re not participating to the extent necessary to get the full match, you’re literally refusing free money, not to mention ignoring an opportunity to get a tax deduction and grow your retirement savings tax-deferred.
  10. Paying too much for insurance. You have a fender-bender and do $500 of damage to your car. Would you report it to your insurance company? If you answered “no” due to the justifiable fear of a rate hike, then let’s hope you don’t have a $250 deductible. If you do, you’re wasting money on higher premiums than necessary. Raising your deductible from $250 to $1,000 could save you 10 to 20 percent.

For even more ideas, check out 10 Painless Ways to Save $1,000. Then share your favorite ways that you and your fellow Americans waste cash on our Facebook page!

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
7 Social Security Blunders That Can Ruin Your Retirement
7 Social Security Blunders That Can Ruin Your Retirement

Making even one of these mistakes can sap your retirement income.

14 Products That Keep Foods Fresh Longer
14 Products That Keep Foods Fresh Longer

We’ve rounded up innovative Amazon purchases to lengthen the life of your favorite foods and beverages.

10 Common Ways Seniors Get Scammed
10 Common Ways Seniors Get Scammed

Here’s what to watch for to make sure you don’t fall prey to some of the biggest rip-offs targeting seniors.

7 Surprising Benefits of Staying Fit in Retirement
7 Surprising Benefits of Staying Fit in Retirement

Improving your overall physical health is just one reason to stay active after 50.

Why Half of Retirees Now Owe Taxes on Social Security
Why Half of Retirees Now Owe Taxes on Social Security

Growing numbers of seniors are paying taxes on their Social Security benefits, but you might be able to avoid this fate.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
7 Kirkland Signature Items to Avoid at Costco
7 Kirkland Signature Items to Avoid at Costco

Even if it seems you save a bundle buying Costco’s Kirkland Signature brand products, they may not be the bargain they appear to be.

How to Buy Gas At Costco Without a Membership
How to Buy Gas At Costco Without a Membership

The warehouse club often has some of the cheapest gas in town. Here’s how you can get it as a nonmember.

10 Things to Stop Buying If You Want a Clutter-Free Home
10 Things to Stop Buying If You Want a Clutter-Free Home

If you like to keep things simple, avoid these purchases.

If You Find This Thrift Shopping, Buy It
If You Find This Thrift Shopping, Buy It

Vacuums from this brand can last a half-century, if not longer — and they’re hot on the resale market.

A Simple Way to Silence Robocalls Today
A Simple Way to Silence Robocalls Today

A few steps can keep your phone from ringing when a spammer calls.

This Company Makes the Best Tires in America
This Company Makes the Best Tires in America

Driver satisfaction with tires is at an all-time high, but one brand stands out.

This Health Issue Can Hint at Dementia Years in Advance
This Health Issue Can Hint at Dementia Years in Advance

One type of pain is especially associated with cognitive decline.

Can I Switch to Spousal Social Security Benefits When My Ex Dies?
Can I Switch to Spousal Social Security Benefits When My Ex Dies?

Knowing when to claim can help you maximize benefits.

Medicare Will Not Cover These 6 Medical Costs
Medicare Will Not Cover These 6 Medical Costs

Don’t let these health care expenses catch you off guard in retirement.

8 Things You Should Always Buy on Amazon
8 Things You Should Always Buy on Amazon

The giant retailer shines when it comes to these things, from basics to hard-to-find specialty goods.

5 Ways to Get Amazon Prime for Free
5 Ways to Get Amazon Prime for Free

Hesitant to drop $119 a year on an Amazon Prime membership? Here’s how to get it for free.

12 Deep Discounts Available on Amazon This Friday
12 Deep Discounts Available on Amazon This Friday

These items are steeply discounted — but the deals won’t last long.

5 Ways to Fill Your Pantry With Free Food
5 Ways to Fill Your Pantry With Free Food

Anyone can take advantage of these resources.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

6 Reasons You Should Stop Hiding Cash at Home
6 Reasons You Should Stop Hiding Cash at Home

Stashing money around the house is anything but harmless.

Beware This Hidden Ingredient in Rotisserie Chicken
Beware This Hidden Ingredient in Rotisserie Chicken

Something foul may lurk in those delicious, ready-to-eat birds.

5 States With the Worst Health Care for Retirees
5 States With the Worst Health Care for Retirees

All of these states are located in the same region of the nation.

36 Things That Will Be Obsolete Soon
36 Things That Will Be Obsolete Soon

The writing is on the wall for dozens of things we have grown up with.

5 Products You Should Never Buy Generic
5 Products You Should Never Buy Generic

Sometimes the brand-name version is clearly superior.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.