If you want to be rich in the future, you will need to start saving today. If you want to cut spending and save money, the easiest way to do it is to look at where you are wasting money, stop wasting money and start saving that money instead.
We have all made the BS excuse that we can’t afford to save. My bills are too much. Rent is due, a hot water heater breaks. I get it, these things happen, but I am here to tell you that there are a bunch of things you are spending money on every day that you could cut out tomorrow that will help you to attain millionaire status one day.
Don’t believe me? Well, here is a list of 10 things you are wasting money on now that are holding you back from becoming rich.
#1 Paper towels
When I was a kid, we didn’t use paper towels. When we dried the dishes, we did so with a cloth towel that got washed and re-used. Paper towels is like literally throwing money in the trash. Think about how much you use paper towels. We use them to wipe down the counter, the floors, dry dishes, I have even used them to blow my nose. And if that wasn’t bad enough we now have wet surface wipes with liquid cleaner in them that are even more expensive than paper towels.
Not only is this costing us more money, we are creating more waste. We should be ashamed of ourselves. Bit this isn’t an about how irresponsible we are towards the environment it is about how irresponsible we are to our bank accounts. So lets do some math. the average 12 pack of bounty will cost you about $10 or 83 cents per roll. 1 roll per day adds up to about $300 per year.
What would you have if you stopped using paper towels tomorrow and instead invested that money into an index fund earning an average of 7% annually over 25 years?
$300 per year x 7% annually over 25 years = $19,500
#2 Bottled water
Speaking of stupid shit we waste money on today that we wouldn’t dream of 30 years ago, bottled water. When I was younger if we were thirsty enough we would drink from the garden hose. Today you can’t go anywhere without seeing bottled water. Seriously, they are everywhere. Look around wherever you are right now, chances are there is a bottle of water in view.
We are paying for something we can get for free from the faucet. I found myself going through a case a week before I smartened up. That’s 5 bucks a week or $280 a year
$280 per year x 7% annually over 25 years = $18,000
#3 Coffee
Do you drink coffee? I do. Do you drink overpriced caffe mocha frappa what the??? from starbucks? Then you are a fool. If you do this every day then you are going to add 2-3 years to your entire time required to work. Congratulations and I hope it was worth it.
You either love going to work or you love that coffee latte drink so much it is worth taking the extra 3 years of commuting to a job you hate and being miserable for 9 hours a day 5 days a week because that is how much it will cost you. Lets assume you are spending 5 bucks a day on your beloved starbucks 5 days a week. That comes to $25 a week or $1300 a year.
$1300 per year x 7% annually over 25 years = $85,000
#4 Smoking
If you smoke, you are an idiot. Stop immediately. If you need to seek help, do it. I am proud to call myself a non smoker. I am not proud of all the money I wasted on cigarettes.
In New York a pack of cigarettes can cost upwards of $13. On average a pack in the U.S. will cost you $6. Therefore, your average pack a day smoker will spend $2,200 a year on cigarettes.
$2200 per year x 7% annually over 25 years = $143,000
#5 Cable TV
Over 90 million Americans spend an average of $100 per month on cable TV/internet. I myself have spend as much as $180 a month on these services.
I am not going to tell you to eliminate all forms of entertainment from your life, but you need to review your bill and call your cable company today. Some of you may need to cancel completely as I once did for 2 years. I was the only single 20 something year old man I knew who did not have cable or internet for 2 years. But I saved enough money in those 2 years to get completely out of debt and build enough savings for a down payment on my first condo.
Before I do the math on this, times have changed quite a bit since I was in my early 20s. We need to consider the following
#5.5 Streaming Services
According to a recent survey, 57% of Americans subscribe to at least one streaming service. Services such as netflix, or hulu, the wwe network, etc. This is in addition to cable.
These services usually run about 10 bucks a month. These services along with cable and internet can bring your total monthly bill to the $200 range.
Lets look at some numbers.
- The average American watches 5 hours of TV per day.
- Average American is paying $200 monthly for cable/internet/streaming services to watch those 5 hours of TV
- The average American earns $21 per hour according to the Bureau of Labor Statistics
So if you earn $21 per hour and your TV privileges costs $200 per month you are working almost 10 hours a month just to pay for the privilege of watching tv for 5 hours a day. Over 25 years you will work 3000 hours just to pay for TV. If you work 40 hrs a week, that is 75 weeks of work.
Seems like an awful lot of time to work just so I can watch some TV.
At the very least, you owe it to yourself to try to minimize some of these costs. Call and get your bill lowered. Cancel one of your streaming services and see how long you can live without it. You might be surprised.
Lets assume you can save 50 bucks a month here. That is $600 a year
$600 per year x 7% annually over 25 years = $39,000
#6 Gym Membership
I once paid for a gym membership for 10 months without going to the gym a single time. If you are paying for a gym membership and you actually go to the gym regularly, then good for you. I applaud you and encourage you to continue.
If you are paying for a gym membership in the hopes of one day getting motivated enough to go, stop paying now. If you finally find the time or motivation to go to the gym regularly, you can always rejoin, But for now you need to stop throwing this money away.
Average gym membership is about $35 per month or $420 per year.
$420 per year x 7% annually over 25 years = $27,500
#7 ATM Fees
There was a time when banks paid you for your business. Today, the interest rates they offer can’t beat inflation, they charge ridiculous checking fees and they even have the nerve to charge you just to withdraw your own money using an ATM machine. It is even worse if you use an ATM that is not owned by the bank that your account is located.
These fees can reach as high as $11 per transaction with the average being $3 per transaction. Lets say you do this once a week, you are looking at spending over $15o per year just in fees to access your own money. It is worth waiting in line at the bank for 3 minutes to make the withdrawal.
$150 per year x 7% interest over 25 years = $9400
#8 Credit Card Interest
Credit card interest is another BS bank charge that adds zero value and is totally avoidable. The average credit card interest rate is 18%. The average credit card balance in America is $7000. That is $1200 a year in interest payments the average American makes.
You need to get out of credit card debt fast and stop wasting money on these useless interest payments.
$1200 per year x 7% annually over 25 years = $78,000
#9 Coupons
Why aren’t you using coupons? You are spending money on all of these things, why not spend a few minutes to hunt down some coupons and save a little money?
Almost every supermarket offers some kind of special savings card that you can carry around on your key chain. Furthermore, it takes less than a minute to apply for one while you are on line checking out.
I am pretty sure Colgate toothpaste is on sale somewhere 365 days a year. I swear every time I open the Sunday paper I find a coupon for Colgate. And most of the time their are combo offers where you can basically get it for free. I have a stockpile of toothbrushes and toothpaste so high I will probably never pay for another toothbrush as long as I live.
Beware the its on sale trap when using coupons. We still only buy what we would buy anyway. We don’t buy stuff just because it was on sale. Using coupons on items like toiletries, clothing, diapers, and food that you will need to buy anyway are a great way to save some money.
Someone spending $2 on the Sunday paper and 15 minutes clipping coupons can easily save themselves $20 a week on their grocery bill. That’s $1000 a year.
$1000 per year x 7% annually over 25 years = $65,000
#10 Lottery Tickets
I know, its only a dollar. You gotta be in it to win it. Dare to dream.
The average American spends $200 on lottery tickets each year.
$200 per year x 7% annually over 25 years = $12,500
You want to win the lottery, practice all of the savings tips outlined in this article and you will hit the lottery.
The total savings of someone practicing every one of these tips comes to a grand total over 25 years of…
$499,900
So if you start at age 20, and stay diligent for 25 years, by age 45 you will have $499,900
35 years or age 55…
$1,000,000
45 years or age 65…
$2,000,000
As you can see, there is really no reason to not start saving immediately. You may not be able to follow every one of these tips but choose some that work for you, be persistent and watch the savings roll in.
Happy Saving
Earl