How Do You Waste Your Money?

One of the most important things you can do for your personal finances is to limit the amount of money you waste. Wasted money results in outflows that do very little for you while limiting the capital you have to put to work in ways that will benefit you.

Everyone wastes their money in some ways. Kiplinger has a list of 20 Ways to Waste Your Money . As I was perusing the list, I thought of the top 5 ways I have wasted my money in the past — or still waste my money today:

1. Dine out frequently . When we first married, my husband and I dined out a lot. We were both in school, and busy, and it just didn’t seem like there was time to cook. Now, though, we try to limit our dining out to once a week, and we do it at lunch to save money. Instead of dining out being our “necessary” way to eat, it’s a nice way for us to spend time together.
2. Pay an upfront fee for a mutual fund . Yes, way back in the day, I got a mutual fund with a sales load. That mistake was remedied by turning to no-load mutual funds. That issues was in turn remedied by getting out of managed funds altogether and relying instead on index funds.
3. Tying for a big tax refund . I used to think of a tax refund as a savings plan. I’d withhold a great deal, and then get my “free” money after filing my tax return. Then I learned that such a mindset is actually a waste, since it provides an interest free loan to the government, while depriving you of capital you could be using to your advantage. No I strive for a $0 tax refund .
4. Buying things you don’t use . We still do this sometimes. Something looks cool, or there’s a “great deal” on something. We only have a vague idea that it would be nice to have it, but we buy it anyway because “you never know.” Really, though, you do. It sits useless at your house. We’ve been trying to curb this process.
5. Pay for unnecessary services . Do you have services that you don’t use? Unlimited calling on a cell phone that you don’t really take advantage of? (Prepaid cell phones can help.) Cable channels you don’t watch? My husband likes to have the sports channels, but that’s all we watch. But we’re still paying for the other channels we don’t use. At some point, though, we’ll get sick of it. Probably when Sports Center starts streaming live online…

What are some of the ways you are wasting money?

Image source: *mr. nick via Flickr