Sham Gad says the first step to saving is finding the extra money to put away, which is best done by eliminating some common money-wasting activities.
By Sham Gad*
Despite the benefits of putting some money away, most people take a passing interest in actually doing it.
If you’d like to make regular saving a part of your life, read on to find out how to conquer the first step: finding that extra money.
You can begin by paying attention to these top money wasting activities.
- Convenience stores
Many people don’t think about the markup they pay for convenience store items.
Here’s a hint: it’s huge.
This is because, unlike supermarkets, convenience stores don’t purchase food in large quantities, and also because they make you pay more for the convenience they provide.
So, unless it’s an emergency situation, avoid shopping at convenience stores.
The premium you pay for convenience is not worth the assumed convenience you get.
If you visit convenience stores often, the annual savings of cutting out these visits can be tremendous.
- Mobile phone plans
Take the time to check your monthly mobile phone bill — you may be paying more than you need to.
If you are using fewer minutes than your monthly plan allows, switch to a lower-rate plan.
If you are using more minutes than your monthly allotment, then upgrade to a higher minute plan.
Before making any changes to your plan, sit down with a list of your mobile phone provider’s offerings and compare and determine which plan provides the most value based on your needs.
You should also scan through your plan for added features like text messaging and mobile internet.
If you aren’t really using these features, get rid of them — they’re costing you money each month!
- Soft drinks
This one is a sneaky money waster.
Not only does ordering beverages along with a restaurant meal boost your total expenses, but soft drinks also have one of the highest markups of any restaurant item, and thus provide lower value for your money.
Consider a typical family of four that eats out twice a week at casual restaurants.
Assuming an average price of $1.50 for a soft drink, that totals $12 a week, $48 a month, $624 a year.
Just cutting out this one item from your meal could mean significant savings that could go into something much more productive, such as a retirement savings plan.
So dine out, but opt for water!
- Unnecessary bank fees
Many people unknowingly pay a lot to their banks in the form of fees.
If you don’t know what fees your accounts are subject to, spend a few minutes finding out.
Go back and examine the rules governing your chequing and savings accounts.
Also consider consolidating bank accounts, as often one account with a larger minimum can eliminate numerous fees that might otherwise exist.
- Magazines
If you’re the type of person who likes to occasionally pick up your favourite magazine from the local newsagent or supermarket, consider getting an annual subscription.
Even if you don’t want the magazine every month, the cost of a couple of issues at the newsstand is enough to cover the entire annual subscription.
- Annual credit card fees
Unless you have a poor credit history, there is no reason to pay annual credit card fees.
A host of Visa, MasterCard and Discover cards have no annual fee, yet many people pay $100 or more a year for the privilege of holding a premium credit card.
Unless you’re a wealthy, exclusive holder of an elite-level credit card with exclusive perks, most people should not be paying annual credit card fees.
And speaking of credit cards, make sure you make a payment on time every month, even if it’s the minimum.
Many credit cards charge high monthly late fees, charges which accrue interest along with your existing balance.
Be proactive
Spend a couple of hours and go over the above categories along with any other regular habits you may have accumulated over the years.
The time will be well spent as it could mean hundreds of dollars of recurring annual savings.
The bottom line
Shopping at convenience stores, wasting money on magazines, and high credit card and bank fees are easy ways to waste money.
Taking some time to go over your spending habits could be well worth your time.
* Sham Gad is the Managing Partner of Gad Capital Management in Athens, Georgia, USA.
This article first appeared at www.investopedia.com.
