Americans pay the price for convenience every day, and some common expenses can add up to a significant amount each year. The three things that Americans spend the most money on are housing, transportation and food. While those three things are necessary expenses, your spending can be altered to get the most out of your budget.
Planning ahead and being aware of your income and expenditures is the best way to set yourself up for financial success. Develop a budget and stick to it to make the most of your finances. Here are some common costs that might be keeping you from saving money.
Americans spend more on prescription drugs than other countries, and in 2014 it was reported that the average American spends $1,112 on prescriptions in a year.
To alleviate some of the costs associated with medications, avoid buying brand-name medication when there is a generic alternative. Active ingredients in most generic alternatives are the same as brand-name drugs.
According to the U.S. Food and Drug Administration, generic medications will often cost less than their brand-name counterparts because their manufacturers don’t have to repeat the clinical trials that are required for name-brand medications. Because manufacturers of generic prescriptions are able to avoid those fees associated with testing, consumers are able to purchase those medications at a significantly lower price. Generic prescriptions are typically 85 percent less expensive than brand name medications. When it comes to safety, the FDA requires generic medications to be as safe and effective as name brand drugs.
For additional savings, ask your pharmacist what the cost of your medication is with insurance and without insurance. Some insurance co-pays cost more than it would be to purchase your medication outright with using your insurance. GoodRx offers additional discounts and coupons at participating providers.
2. Cell phones
Americans have always paid more than any other country for cell phone service, and are now paying an average of $1,074 per year for service. Recently, service providers have see a decline in profit because of an oversaturation of the cell phone market, causing a price war between the major carriers.
Most consumers are unaware that calling their service provider and asking how to lower their payments could save them money instantly. Some providers are willing to offer discounts to keep customers, and some customers can save money by switching to another carrier. Call your service provider and ask what they can offer you to see how you can get the best deal.
Monitor your phone bills closely to make sure you aren’t being hit with any recurring charges on your bill. Some carriers allow third-parties to charge customers for services the customer didn’t authorize, which is called cramming. The fees are usually small amounts so they go unnoticed by the consumer and can add up over time because they aren’t recognized. Question any recurring payments you don’t remember signing up for to avoid getting overcharged.
3. Phone data
Assuming you don’t pay for unlimited data and ration your data usage throughout the month, take advantage of the free WiFi located at most public places. Taking the time to connect to public WiFi can help you avoid the of risking overage charges for exceeding your data plan limit.
There are service providers who offer a “WiFi first” option instead of using strictly cellular data. Republic Wireless is a phone company that leans on WiFi before data to help keep you connected while offering lower-priced plans. Their goal is to take advantage of extra coverage available in spots where cell service may not be available. Google’s Project Fi is a similar program that puts users on the best available network between WiFi and available LTE networks.
If your Better Homes and Gardens magazines are piling up and left unread, it may be time to cancel your magazine subscription. It is easy to forget about a fee that only takes a few dollars from your account each month, but the long-term expenses of unused subscriptions can add up.
A statement from Hiatus in 2016 claimed that more than 70 percent of consumers continued paying for subscriptions after their free trial ended because they forgot to cancel the service. Truebill, a subscription management service, reported that 17 percent of users who used their service to cancel memberships saw an annual savings of over $500.
Truebill is a free service that helps users by tracking bank data to catch recurring payments. They have agents to help cancel fraudulent charges and unwanted subscriptions, as well as handle bill negotiations and request refunds when you are overcharged.
To avoid falling into the pit of forgotten subscriptions, make a list of subscriptions you sign up for and make sure you know when free trials run out to avoid paying for something you aren’t using regularly. Read the fine print so you know if you’re signing up for a recurring payment.
Not having your meals planned for the week can lead to leaning on delivery or takeout when you’re in a pinch. While the convenience of ordering takeout can save you time, it most definitely is not saving you money. The average household spends over $3,000 a year on takeout, according to a Bureau of Labor Statistics report.
To get the most out of your food budget, take some time to set up meals for breakfast, lunch and dinner throughout your week. Prepare meals ahead of time so you can grab them on the go, and follow your plan to hold yourself accountable.
2018 gas prices are estimated to soar to an average of $2.79 a gallon, which comes out to 37 cents more than 2017’s average. With gas prices steadily rising at the pump, it’s good to be aware of how much each station charges around you.
GasBuddy is an app available for most smartphones that maps out the closest gas stations and prices out the cost of gas at each. Similar apps like AAA TripTik and iGasUp can do the same thing. AAA TripTik will also map out the cheapest routes so you can get the most out of your gas tank.
Another tip is to plan ahead and fill up when you’re near a gas station instead of waiting to fill up when you’re on “E.” Waiting last minute can cause you to fill up at the most convenient gas station, which might not be the cheapest.
7. Bank Fees
The average American pays $329 on bank fees in a year, according to Chime’s 2017 report. Most of those fees were for overdraft protection — an opt-in service that 3 out of 4 consumers don’t remember opting in for. Shop around for a bank that suits your needs, whether that be low interest rates, free foreign ATM use or a low minimum balance.
If your current bank charges ATM fees, get cashback at checkout instead of at the ATM. If your bank charges for withdrawing cash at another bank’s ATM, stay in your bank’s network to avoid paying a fee for your own money.
Be aware of the interest you are being charged, and develop a system that helps you pay off the smallest of your debts first to help you start eliminating those payments one by one.
8. Shipping fees
Expedited and overnight shipping costs can sometimes be 4 times what it would be for ground shipping. In 2014, Consumer Reports did a report about the shipping prices with UPS, FedEx and USPS. UPS ended up having the highest prices for expedited shipping, with their rate as high as $109.24.
To avoid having to pay a fortune for overnight shipping, plan ahead and allow yourself time to pay less for standard shipping.
The biggest day of your life doesn’t have to be the most expensive. The average cost of a wedding in the United States is over $33,000 — but those costs vary by location. Couples in New York spend an average $76,944 while couples in New Mexico spend $17,584.
To get the most of your wedding-day budget, plan to have your wedding during the off season (January through March) instead of during the peak season (June through October). Considering having a longer engagement instead of rushing into the big day. The extra time will give you the opportunity to shop around the most affordable vendors and venues before they are all booked up on your date.
10. College textbooks
College is expensive and the costs for students continue to grow. The average student loan debt for 2017 graduates was over $39,000 – 6 percent higher than the average in 2016. One of the growing fees associated with higher education are the textbooks and their prices that have increased by 181 percent since 1998, according to AEI in a 2016 study.
College textbooks have grown 4 times faster than the rate of inflation.
If you are able to get out of purchasing new textbooks with expensive access codes, take advantage of websites like Chegg and even Amazon that offer used book rentals at lower prices. At the end of the semester, you will have the option to buy the textbooks out or mail them back. This will save you money and the expense of purchasing an edition that will get updated and become outdated the following year.
Families of four waste an average of $1,500 a year on groceries that go uneaten. Once again, planning ahead and giving yourself more time to prepare is the secret to saving you money. Create a grocery list before you leave the house and stick to your plan to avoid going over budget. Shopping on an empty stomach can also lead to impulse purchases.
Cable costs went up in at the beginning of 2018 with Comcast and AT&T announcing increases in their cable plans. According to S&P Global Market Intelligence, cable and TV bills have raised 53 percent since 2007 and are still on the rise. Instead of paying for a cable company to give you more channels than you can possibly watch, consider switching to a television streaming service. Netflix and Hulu both start at $7.99 a month, while the average cable bundle costs $105.
13. Lottery tickets
The odds of you winning the Powerball is 1 in 292 million. In fact, you are more likely to be sent to the ER for a pogo stick-related injury than you are to win the Powerball. Americans spent $80 billion on lottery tickets in 2016, and the numbers average out to $325 for every adult in the United States. That’s $325 that can be invested in something with an almost guaranteed payout, like promising stocks. Wasting money on lottery tickets or bets is a system designed to make you less-likely to come out ahead.
14. Mortgage payments
The cost of housing is a necessary evil. Housing costs take up 41% of the average American’s yearly expenditures. A significant amount of the fees associated with home buying is the amount of interest that accrues over the length of the mortgage. Setting yourself up to pay off the principle on your mortgage early can help you avoid paying some of that interest.
The average interest rate on a 30-year fixed mortgage is 4.38%. If a homebuyer purchases a $200,000 home and puts down the recommended 20% to avoid being required to carry private mortgage insurance (PMI), they will pay over $127,000 in interest at the end of their mortgage. Broken down, this is an additional $4,258 a year and $355 a month just on interest.
One tip to help pay off that mortgage early is to pay 1/12 extra on each monthly payment towards the principal. For the previous example, it would take a $799 monthly payment to $865. At the end of the year, it would be the equivalent of making one additional payment a year. If your interest rate stays the same, it can save you over $10,000. While this isn’t a significant amount of money compared to the loan amount, it is still less money you are putting towards interest payments.
Some banks may have fees for paying off the loan too quickly, so be aware of the cost of the penalties and make sure they cost less than the interest that would accrue.
The cost of PMI can also drive up the price of your monthly payments and overall costs if you are unable to put down 20%. PMI typically costs 0.5% to 1% of your entire loan amount each year. Using our previous example, if you were only able to to put down 5% instead of the recommended 20%, you would have to take out a loan for $190,000. Not only will you owe more for the loan and have to pay more monthly, you will also be paying for PMI until you have reached 20% equity in your home.
15. New cars
Instead of buying a new vehicle, consider buying used. One of the perks of buying a used car is that the lower price means there will be less depreciation on your purchase. While the value of your car will inevitably still depreciate, you will avoid the initial drop in value the first owner took when they drove off of the lot. Another perk of buying a pre-owned vehicle is the ability to skip the additional sales tax placed on new vehicles in some states. Used cars aren’t subject to those additional taxes.
Your monthly payments can also be significantly lower if you buy pre-owned. On average, the monthly car payment for a new car is $525 in 2018, while used cars average $378 per month.
Buying used doesn’t mean you won’t get a good warranty. Some used car dealerships, like CarMax, offer warranties that are comparable to manufacturer warranties.
16. Car upgrades
If you do decide to purchase a new vehicle, weigh your options before adding on some of the eligible upgrades that are options for new vehicles.
Extended warranties sold at dealerships are marked up significantly to maximize profit. They are not required, but if you are interested, it is in your best interest to shop around at other reputable sources to get the best price for the warranty. Finding the best price for your extended can sometimes mean cutting the dealership out of that transaction.
If you already have a phone with GPS capabilities, there is no reason to pay for another navigation system that can cost upwards of $4,000 in some luxury vehicles. Those navigation systems typically come with updates for the maps, which cost extra fees as the systems are updated.
According to a report by Acorn, the average American spends $1,100 a year on coffee. Skip the line each morning and buy your favorite coffee in bulk to brew it right at home, and reduce the use of plastic waste by buying bagged coffee instead of coffee pods. Invest in a good drip coffee maker or french press for stronger coffee or cold brew. Not only will brewing your coffee at home save you some money, it might save you some time on your morning commute.
The average family spends $1,800 a year on clothing. Instead of paying full price for clothes at a department store, take advantage of websites that offer discounted and gently used clothing and accessories. Poshmark is an app that allows users to post their clothing and items on the digital marketplace for customers to buy. Items are often significantly marked down from the original prices.
Thrift stores can also house some hidden treasures, sometimes with the original tags. Try shopping at Goodwill or local thrift stores to find great deals on name brand clothing.
Other apps available for download that can help save you money when you are shopping at box stores for full-priced items. Cartwheel is an app for Target shoppers that offers 5-50 percent off of items at Target.
19. Baby Clothes
Baby clothes can be expensive, and may not be worth it in the long run when you realize your little bundle of joy grows very fast. Shop gently used or discounted baby clothing to get the most for your money.
Instead of buying clothes for your new addition clothes before they arrive, wait until your baby gets here before spending money on their wardrobe. Some babies may come out bigger than expected and may not fit into newborn clothes. Newborns can also experience growth spurts, meaning those overpriced boutique baby clothes may not fit your little one if they are bought too far in advance.
When planning your next vacation, don’t book the first hotel or flight you find online that looks like a good deal. Booking ahead of time can offer you larger savings, with most hotels and airlines offering lower rates for travelers with flexible travel dates. If you have specific dates you are looking for a flight, Sundays are the best days to shop for flights because they are typically offered at a lower rate. Sundays far enough in advance can save you even more money.
Shop around on travel sites like Expedia and Travelocity to help you find hotel deals near your destination. They offer bundled vacation packages depending on what you need when you travel, so you can find your hotel, flight and rental car all in one place.
If hotel prices are still looking a little steep for your budget, consider AirBnb or VRBO and rent from locals at your destination.
Arguably one of the biggest expenses known to city-dwellers are the costs accrued from parking and parking tickets. In a survey by INRIX Research in 2017, it was concluded that overpaying for parking cost Americans over $20 billion a year, or $97 per driver. The study also mentioned that Americans spend an average of 17 hours a year just looking for parking, which came out to the equivalent of $345 per driver in wasted time, fuel and emissions.
And while parking tickets are frustrating and can be expensive, they usually aren’t written for no reason. Be aware of the signs where you decide to park to make sure you are parking in the appropriate times posted on parking signs. Scope out the sidewalks to make sure you aren’t too close to fire hydrants and ramps, which can rack up extra fees on tickets.
22. Paper towels
Paper towels are a one-use product that you can eliminate from your grocery list. According to AOL in 2012, the price of 8 rolls of paper towels is $14 and the average family uses 2 rolls a week. The cost for using that amount of paper towels could average out to $182 a year.
Instead of using paper, switch to dish towels to help clean up messes and dry your hands. It will save you money, and also help cut down on waste. The waste associated with paper towels is tremendous. According to Wide Open Eats, if families used one less sheet of paper towels, 554,000 trees could be saved every year.
23. Wasted water
The average American pays $104 a month on their water bill. If you feel like you are paying too much for your water usage, make sure those products in your home that use the most water are in working order.
Be conscious of the water you are using for yourself during daily tasks. Taking long showers can cause your water bill to rise. If you need a significant amount of water to complete a task, such as washing your face, shaving, or washing the dishes, filling up the sinks with water can help you save some water and money. Shop for products that aim for water efficiency. It will help you save money and be more sustainable.
Instead of paying for each individual song in your music store, consider some of the music streaming options available online. Pandora Premium, Apple Music and Spotify all cost $9.99 a month and offer streaming to your device. They allow you to search and download specific songs, listen to stations tailored to your music taste, and build your own playlists. Apple offers a discounted rate for students, who can sign up for $4.99 a month with a valid school email address.
25. Bottled water
The average American spends $100 a year on bottled water. While the average cost of bottled water is relatively inexpensive at $1.27 a unit, the cost of tap water is essentially free. Instead of purchasing bottled water for almost 600 times what you would pay for tap water, skip the plastic and buy a refillable water bottle you can reuse.
If you’re worried about the safety of drinking tap water versus bottled water, you shouldn’t be. Tap water is held to higher purity standards than bottled water and is regulated under the EPA’s Safe Water Drinking Act (SWDA).
Avoiding bottled water isn’t strictly financial — there is also an environmental responsibility to cut down on plastic waste. Simply put: Disposable water bottles are unnecessary. There are better, safer and cheaper options to stay hydrated.
26. Convenience store snacks
Americans will pay the price for convenience, and there’s nothing more convenient than adding a few extra snacks at the register when you stop to grab your coffee each morning.
Instead of stopping at gas stations to stock up on food and drinks before a trip or on your way to work, plan ahead by getting snacks in advance and packaging them up at home. Not only will it curb the extra spending on convenience store snacks, you might save some time on your morning commute.
27. Unreturned items
Be prompt about returning items you can’t use and save your receipts. Some merchants have strict return policies, and to avoid wasting money on items you aren’t using, take them back as soon as possible for a credit or refund.
When ordering online, be aware of the retailer’s return policy and whether or not return shipping is included for items that may need to be sent back. The risk of having to spend more on shipping than you did on your purchase may make it not work a purchase at all.
28. Viewing your credit score
Some free credit score sites still require a credit card for registration – meaning there may be future fees and charges associated with your account. Credit Karma and Wallet Hub are two sites that don’t require a credit card to register to view your credit report, and they will allow you to view your TransUnion and Equifax scores. Most banks also provide you with your free FICO score. With so many options to view your credit score, nobody should have to pay a fee to view it.
29. Formal wear
If you shop regularly for formal wear for special events, you may find yourself spending money on expensive outfits that don’t get worn more than once. Instead of spending too much money for a dress you may never wear again, try sites like Rent the Runway that allow you to rent formal dresses. Rent the Runway gives customers two subscription options, monthly or unlimited rentals. New customers are offered discounted trial rates.
Renting and paying the monthly fee instead of shopping has saved 68% of their members money on additional shopping.
This alternative can save money in your wallet and space in your closet.
30. Being disorganized
Phone chargers, lighters, keys, and other easily misplaced items can add up and prove themselves to be a waste of your money when you have to go back out and replace them. Develop a system and have a place to put the items you find yourself misplacing regularly to save yourself an unnecessary expense.
Investing in a key finder product like Tile can help you keep track of your keys, and apps located in the app stores can help you locate a misplaced phone.