10 Unnecessary Purchases That Are Eating Up Your Budget
As the post-Recession economy continues to mend slowly, Americans are increasing their annual spending. According to a 2014 Gallup poll, 45% of Americans say they are spending more than they were a year ago, and only 18% say they are spending less. For most, especially older generations, the increase is attributed to money spent on necessities, while millennials are actually spending more in discretionary spending categories, such as leisure activities and clothing.
Perhaps not surprisingly, Americans are also saving less since the recession ended. Some argue that the falling savings rate is an indication of the economy making a healthy comeback, but for the everyday American consumer, it may appear that the penny-pinching lessons of the recession have worn off. While low spending rates can be bad news for the economy, smarter spending is better for individuals and families, and may help the economy evolve to support more informed and thoughtful consumers.
A number of factors contribute to the American propensity for buying large quantities of unnecessary products. Marketing is often the first to be blamed, as its ability to play on consumer emotions can steer even the most careful consumers toward throwing their money away. In a study on the underlying factors that cause impulse buying, 51% of respondents said that a state of “feeling happy” was a trigger for unplanned purchases. While buying expensive items may not create long-term satisfaction, the paper “When Wanting Is Better Than Having” by Marsha L. Richins explains how the anticipation of buying can actually create an experience of happiness.
“Thinking about acquisition provides momentary happiness boosts to materialistic people, and because they tend to think about acquisition a lot, such thoughts have the potential to provide frequent mood boosts,” Richins wrote, “but the positive emotions associated with acquisition are short-lived. Although materialists still experience positive emotions after making a purchase, these emotions are less intense than before they actually acquire a product.”
Actually owning the items frequent shoppers and impulse buyers collect was reported as a relatively dull experience in comparison to seeking and desiring more and more products. Richins added that the frequent shoppers she refers to as “materialists” tend to overspend and have credit problems. While these consumers may believe that the next acquisition is what will bring them happiness or positive life changes, increasing one’s savings account can provide a strong sense of relief and freedom from financial burden.
Most Americans don’t think about all of their small everyday purchases. But even low-price items can add up to make a huge difference in your budget, and even your level of debt and financial freedom. Aside from pervasive spending behaviors that are just plain harmful, such as gambling, alcohol and drugs, tanning, and elective plastic surgery, there are numerous other purchases that can be cut from everyday spending habits. Here are 10 common purchases that could be needlessly preventing you from saving money.
1. Convenient snacks and drinks
Try to make it a rule not to pay for convenience unless absolutely necessary. Food and drinks at convenient stores or events are tempting, but it’s not worth the upcharge or the limited selection. Bring food and drinks from home or support a local deli or restaurant.
2. Beauty products
Instead of spending your money conforming to a notion of beauty, accept yourself without all the makeup. Despite how they are advertised, even skin care products sometimes do more harm than good. Women should be especially cautious, as many drugstore items for women have much higher prices than a virtually identical men’s product. Read lists of ingredients, and try the simplest soaps and personal hygiene products first. Avoid cosmetics altogether.
3. New clothes
Buying used clothing is not only better for your bank account, it’s better for the planet. Clothes are routinely discarded before they are worn out, so instead of letting them go to waste, challenge yourself to find the best deals. Charity thrift shops and other used clothing stores often have $1 days that are great for bargain hunting.
4. Overpriced hotels
Today, no one needs to overpay for lodging. Between Yelp and TripAdvisor, you can find the cheapest, cutest, and best reviewed mom-and-pop motels in any city. Better yet, use Couchsurfing and stay with friendly locals for free. You can take advantage of the sharing economy in all sorts of areas. Rachel Botsman, co-author of What’s Mine Is Yours: The Rise of Collaborative Consumption, concedes a simple principle: Access to goods and skills is more important than ownership of them.
5. Movies, books, and media
Along this same line, you can easily share media in lieu of ownership. Use and appreciate your local library, listen to podcasts and radio, and download classic literature and media from the public domain. Do your best to support your favorite artists and authors by purchasing their work fairly, but also know that you don’t need to own everything. If you want to reduce the number of physical books and movies already on your shelf, pass them along to friends and encourage them to do the same. Making use of little free libraries in your neighborhood is another great way to trade books.
With over 1.5 million apps available on Google Play, there are so many free apps to choose from, you may never need to buy a single one. Some research shows shoppers are more compelled to make impulse buys on a mobile device, so have your guard up and do your research before making any mobile purchase. There is probably a free service of some sort that could easily replace many of the paid apps available.
7. The latest technology
The wisest technology purchases for you may depend on your occupation. However, many Americans want the latest gadget simply because it’s the newest thing. Consider that the latest technological products are often released before the bugs are worked out and the cost is driven down. Make your decision based on your specific needs — on utility rather than impressive new capabilities. If you can still live without a smartphone, don’t buy one.
8. Cable TV and landlines
In some areas, people still have the need for a landline, but often a cellphone can completely replace it. More than 40% of U.S. households don’t have a landline phone. Particularly for those who forego a data plan, this can mean big savings. To the chagrin of cable companies, America’s most hated businesses, the cable TV package model is falling out of favor. With the prevalence of affordable online streaming options that cater to a personalized, a la carte approach, having hundreds of cable channels will soon be a thing of the past. Take delight in accelerating this transition.
9. Gym memberships
For some, the knowledge that you are paying for exercise serves as motivation. However, no one needs to sacrifice a smart budget for a healthy workout schedule. Challenge yourself to use free workouts on Hulu or YouTube or go jogging in your neighborhood. For those who require a facility, such as swimmers, be wary of overpriced options and aggressive sales people. The YMCA offers income-based scholarships, and there are also donation-based programs such as Yoga to the People.
10. Car loans
Monthly payments are the scourge of the budget-conscious, so try to cut out recurring bills wherever possible, especially those that come with interest. A car payment can also mean a high-priced warranty that requires you take your car to the dealer for vastly overpriced maintenance. You can easily go all your life without carrying a car loan. Instead, buy the most reliable car you can afford to purchase outright. Educate yourself on some basic car maintenance, find a reliable mechanic, and always keep money set aside for your next car.