These bad financial habits cost me $4,000 a year. How much are they costing you?

Image Source: Getty Images

Planning for the future is a good way to stay on track financially.

Key points

  • Identifying places where you can cut back is the first step in resetting your budget.
  • Annual budget and insurance policy reviews are a good way to save money.

When it comes to personal finance, there is no such thing as perfection. No matter how well we understand how money works, we are all a work in progress. For me, the goal is to identify where I’m going wrong and take steps to do better next time. When it comes to bad financial habits, these are the four I’m fighting right now.

1. Throwing food: $2,000

Given how many people don’t have enough to eat, the amount of food I waste by throwing it away is nothing short of disgusting. According to the nonprofit organization Feeding America, the average American family of four throws away $1,600 worth of produce each year. If a family of four throws away $1,600 worth of apples, bananas and cantaloupe, my husband and I throw away at least $800 worth of similar products. And honestly, I suspect that number is low.

I go to every shopping trip with a great plan for healthy eating. I fill the cart with fresh produce to further that goal. But on busy days when my energy drops, it’s not a grapefruit that I reach for. The guilt runs deep as I fill my trash can with cucumbers, kale, and other healthy foods I should have used to nourish my body. Not only am I wasting money, but I’m also wasting a precious resource that others desperately need.

Several weeks ago, in preparation for moving out of state, I decided to round up the food in our pantry and drop it off at a local food bank. But first, I needed to check the expiration dates. I have a terrible habit of running to the supermarket without looking at what I already have at home. That habit leads to unnecessary duplicates. As I scanned the dates, I was horrified to see how many were about to expire or had already expired. It reminded me of how much food I would be wasting by not keeping track of what we have.

Add to that the amount of leftovers we throw away from restaurants, and conservatively, I estimate I waste another $100 a month. In total, that brings my annual food waste to $2,000.

To remedy the problem, I adopted a habit that doesn’t particularly excite me. I’m only buying enough food for a few days, including produce. If we haven’t eaten the food from home, I don’t go back to the supermarket. I also make a shopping list before every trip and check the fridge and pantry before I leave. Unless I’m preparing for a blizzard, I’m determined to make quick trips every few days. As someone who hates shopping, it’s not ideal, but I have to keep doing it until I get into the healthy habit of eating the food I buy.

2. Procrastinate: $300

I frequently write about the importance of annual insurance reviews and I know how valuable they can be. I used to be good at reviewing our auto and home insurance policies every year, but have allowed the daily hustle and bustle of life to distract me. While shopping for a homeowners policy on the new house, I realized that it had been almost two years since I had pored over the details of our policies. I kept telling myself I’d do it “next weekend,” but every time a weekend rolled around, I found other, more important things to do.

Last week I finally reviewed our policies and found that they no longer meet our needs. For one thing, I had never signed the blanket policy adding earthquake coverage. I’d love to blame that on our insurance agent, but if I had checked the policies earlier, I would have figured it out.

I also discovered that the liability coverage included in our homeowners policy is too low for comfort. Let’s say someone comes to our front door to make a delivery. If the delivery guy falls off the porch and hits his head or breaks his leg, it’s our insurance that will pay his medical bills. As soon as the medical bills added up, I realized we needed more liability coverage.

I spent time looking for new policies, curious to see if another company might offer a higher level of coverage at a lower price. I ended up switching to Farmers for home and auto coverage, saving $300 in the process.

That’s $300 you probably could have saved last year too, if you hadn’t procrastinated.

As mentioned, I don’t like shopping. And yet, I’m the only one in my family who buys everything from home furnishings to birthday gifts. I usually expedite the checkout to reduce the pain of moving from store to store (or website to website). That means I rarely compare prices. I tell myself that I am saving time, but I must admit that I am probably wasting money. I guarantee you that I spend a minimum of $100 per month rushing to make my purchases.

4. Allow expenses to reappear: $500

About a year ago, I wrote an article about canceling all my subscriptions. I must admit I was feeling pretty smug. I went through our budget with a fine-tooth comb, realized how many subscriptions we were paying for, and canceled almost all of them.

I can’t tell you how we managed to let those expenses show up again, but we did. While working on our budget this month, I realized how much we’re paying for Netflix, Amazon, Hulu, Acorn, BritBox, skincare subscriptions, and other items we can live without. Although we can afford the extra $45 per month, there’s no point in paying for things we wouldn’t miss if we canceled again.

I kid you not: I have no intention of canceling Netflix, Amazon, or my husband’s GQ box, but I’ll get rid of the rest. It became clear that I will have to reset this part of our budget at least twice a year. Fortunately, it is quite easy to do.

Despite my bad habits, I surprisingly dedicate myself to saving and investing. It’s that desire to prepare for the future that reminds me how important it is to cut down on unnecessary spending.

The $4,000 a year I’m wasting comes to just over $333 a month. If I invested it monthly at 7% instead of throwing it away, there would be over an additional $55,000 in our retirement account. In 20 years, that would be almost $164,000, all because I controlled waste.

And you? Are there leaks in your budget that could be plugged? Now may be the time for all of us to turn waste into savings.

Alert: Highest Cash Back Card We’ve Seen Now Has 0% Intro APR Through 2023

If you’re using the wrong credit or debit card, it could be costing you a lot of money. Our expert loves this top pick, featuring a 0% introductory APR through 2023, an amazing cash back rate of up to 5%, and all somehow with no annual fee.

In fact, this card is so good that our expert even uses it personally. Click here to read our full review for free and apply in just 2 minutes.

Read our free review

Add Comment