6 Common Purchases That Can Waste Shocking Amounts of Money
Are your spending habits quietly sabotaging your financial goals?
It's quite possible that you have some financial habits that you believe are smart money moves, but instead quietly drain your wallet. From bulk buying mistakes to overpriced luxury items, these financial missteps can easily lead to overspending.
Here are six of the most shocking expenses that waste your money and how to adapt your habits for lasting savings.
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1. Perishable Bulk Buys
When it comes to smart shopping tips, buying in bulk can seem like a no-brainer. However, Caleb Wood-Dagget, founder and financial advisor at Commonwealth Strategy Advisors, pointed out that a lot of people waste money in this area without ever realizing it.
"Purchasing a lot of one item for a discounted price might sound like a good idea, but if half of it expires or goes unused, then you're not actually saving anything," said Wood-Dagget. "You just end up throwing money out slowly, rather than all at once."
Melanie Musson of InsuranceProviders.com added that you can't assume just because something is in a larger container, it's cheaper. "You need to consider the price per ounce or unit price and compare it to the price of smaller packaging," she said.
2. Overpriced Luxury Skincare
High-end brands promise premium ingredients or cutting-edge features, but sometimes a budget-friendly alternative delivers the same result.
"There is no magic skincare formulation," Musson said. "Skincare products often share many of the same ingredients across the board. If you compare ingredients on a $100 bottle of facial lotion and a $10 bottle and see that they're the same, you can be assured that your result will be the same, but you'll save a lot of money with the cheaper bottle."
3. Budget Airline Tickets
Low-cost airlines may advertise cheap fares, but hidden fees can quickly inflate the total cost.
"While discount airlines do offer lower fares, they may charge for seat selection, food, carry-on bags and printed boarding passes," according to Michele Frank, associate professor of accounting at Miami University's Farmer School of Business. "These fees add up quickly and could result in a traveler losing the 'discount' they thought they obtained."
Frank also noted that discount airlines tend to have fewer planes, fly fewer routes and only fly on certain days of the week. This means if your flight is canceled, you may not be able to get on another flight for days, which could add hundreds of dollars to your trip if it means you have to spend extra days in hotel rooms. Therefore, it's important to factor in these costs. Pro tip: a travel-focused credit card with trip insurance included in every booking can be a lifesaver in this regard.
4. Expensive Items You Can't Afford
Swiping your credit card for big purchases can be risky if you're not paying off the balance monthly. Interest charges alone can turn a good deal into a financial burden.
"If you're planning a big-ticket purchase that you need to make, but don't have enough cash to save up for, look for 0% financing specials from big box stores," said Andrea Woroch, a consumer and money-saving expert. "Otherwise, look for a new credit card offering 0% APR and a cash bonus to help pay off the purchase. Just make sure you can pay off the purchase before the 0% interest promo period expires."
5. Name-Brand Items
In the war of generic vs. name-brand products, choosing the former can help you save. Generic groceries, medications and household items often match brand-name quality at a fraction of the price.
"There are a plethora of generic brand products that can save you a lot — from 30% to 50% — without sacrificing quality such as generic groceries, generic meds and even generic clothing from stores like Walmart, Target and Costco," said Woroch. "For instance, you can save 30% on over-the-counter medicine by sticking with the generic brand. The FDA requires that generic medicine, including over-the-counter, work both as effectively and safely as the name brand and it's a whole lot cheaper."
6. Unlimited Mobile Data Plans
Unlimited data plans sound convenient, but most users don't need them. A study from WhistleOut found Americans waste $1,500 a year on excessive wireless data plans. So, if you want to cut cell phone costs, pick a budget phone plan instead.
"This is likely because many consumers now use W-Fi at home, at the office and even on the go as more businesses and retailers offer Wi-Fi connections at no charge," said Woroch. "Review your actual data and see if your current provider offers a plan that meets your needs, so you stop wasting money on this monthly bill."
Caitlyn Moorhead contributed to the reporting for this article.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal, or tax advice.
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