Are your money habits causing a loss? They might be. Here are 10 common ways people unintentionally lose money:
1. Not Having a Budget
How can you manage your money if you don’t really know where it’s going? A budget is your financial roadmap, detailing income and expenses. Whether you prefer to use an app, spreadsheet, or good old fashioned paper and pencil, start by calculating your income. Next, track your expenses by listing all your costs such as rent, utilities, transportation, and groceries — and don’t forget to account for fun and entertainment. Be sure to include your savings account as a “bill” you have to pay each money.
2. Forgetting When Things Are Due
Late fees are a real budget killer. If you don’t pay your bills on time, you’ll rack up late fees, and if you’re really late (like 30 days) the late payment might end up on your credit report — tanking your score. Late payments can also cancel promotional offers, like 0% periods on a loan or credit card or interest-free Buy Now Pay Later programs, resulting in retroactive interest, fees, or possibly even disqualifying you from using the service in the future.
3. Losing Track of Subscriptions
Subscriptions are the name of the game these days, and it’s easy to lose track of everything you’re paying each month — between the multiple different streaming services, software, meal kits, gyms, clothing deliveries, and so on. In fact, more than half of Americans report paying for a subscription that they did not want or forgot they had signed up for. Make it a habit to review your subscriptions each month and make sure you cancelled those free trial or services that are no longer giving you value.
4. Letting Your Money Mold
In the fridge, that is — food waste is literally throwing money away (and bad for the environment). According to the Natural Resources Defense Council, the average family of four tosses $1,500 in food waste each year. Keeping your refrigerator and pantry organized, meal planning, shopping with a list, and storing items correctly are easy ways to reduce food waste. Oh, and don’t go shopping while hungry.
5. Impulse Shopping
An impulse buy is something you didn’t intend to buy but you had to have once you saw it, like a pack of gum at the checkout stand or a treat between classes since you were walking by Starbucks anyway. Impulse-buys add up — spending $25 on random things each week comes out to $1,300 at the end of the year. The trick to wrangling impulse buys is to actually budget for it and set a limit for discretionary purchases.
6. Not Taking Credit Seriously
A good credit score is key when you need a loan for your next car or plan to open a credit card. Your score represents your creditworthiness, which essentially is the likelihood that you’ll pay your loan. High scores qualify for better rates, saving money on interest over the life of the loan. Bad scores are considered risky, so will limit your options and result in paying more interest. Additionally, some landlords and employers consider your credit score. So how do you build and maintain good credit? Simply pay your bills on time. And if you use a credit card or line of credit, pay it off each month. Or, have a plan to pay off the balance as soon as possible — it’s recommended to keep your credit utilization, or the balance borrowed from your available limit, below 30%.
7. Letting “And’s” Run Wild
It’s okay (and important) to treat yourself from time to time, but remember to keep an eye on the “and”s. “And”s can rack up quickly and sink your budget, like getting an expensive coffee and going out for lunch and getting delivery for dinner. Instead, identify the expenses that you value the most and treat yourself wisely.
8. Getting Hooked By Sales
A bargain isn’t really a bargain if you didn’t need — or really even want — the item in the first place. Have you ever snapped up a shirt because the price was too good to pass up, only to never wear it because it didn’t fit quite right or the color doesn’t go with anything else you own? We all have. Before you hit the checkout, be sure to ask yourself if the item actually fills a need, and is something you actually want. It can also be helpful to keep a wish list and set goals for your shopping trips.
9. Getting a Late Start Saving for Retirement
Time is the secret to saving for retirement, thanks to compounding interest. That’s when you earn interest on the interest you already earned. As soon as you’re over 18 and working you can open an Individual Retirement Account (IRA) and begin making contributions. You might not be able to do much now, but small dollar amounts really add up over time. Take advantage of your employer’s 401(k) program (or equivalent). Many employers offer matching funds as a benefit — for example, if you contribute 4% of your income, they’ll contribute an additional 4%. Matched funds typically vest, meaning a portion becomes yours after a scheduled period of time, but if you quit before you’re fully vested, you will surrender the unvested portion back to your employer. And when it’s time to change jobs, there are several options for what to do with your 401(k), such as rolling it into your IRA or over to your new employer’s 401(k) plan.
10. Literally Losing Money
Do you keep your cash and cards safe in a wallet or loose in your pocket or backpack? Without a home, it’s easy for your money to literally get lost or misplaced — most of us have found change in a couch or bills stuffed in a jacket pocket we forgot about last winter. Keeping it safe in a bank account is even better. Did you know that SESLOC accounts are federally insured by the NCUA? And when you need access to your funds, you can visit over 30,000 ATMs nationwide to pull cash out or you can add your debit card to your mobile wallet contactless payments with Apple, Samsung, or Google Pay.
Looking for more tips for managing your money and improving your financial health? SESLOC offers free educational webinars on a variety of topics — check out the upcoming schedule here.