I’m a Financial Expert: Don’t Prioritize These 4 Expenses Over Saving Money
Written by
Cindy Lamothe
Edited by
Chris Cluff
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Spending is the easiest thing to do in the world. It’s simple to swipe a card at a store or purchase things online without a second thought. You might even think every expense is necessary — especially when it comes to impulse buys.
While spurging every once in a while is part of living a healthy, happy financial life — it is possible to overdo it and skimp on your long-term savings goals.
According to experts, the key lies in balance.
GOBankingRates spoke with Black Mammoth CEO Stoy Hall and Todd Stearn, founder and CEO of The Money Manual, to discuss which expenses you shouldn’t prioritize over savings and what to do instead.
Here are also 25 creative ways to save money.
Subscription-Based Products
“While they are usually items that make you look good or feel good they often are a cause of pain and regret as it pertains to your financial picture,” Hall said. “That is because our impulses are not aligned with our short-term and long-term goals. So we naturally say, I ‘need’ this, as opposed to I just ‘want’ this and will wait for when I save up enough money.”
According to Hall, one of those that can sneak up on you is subscription-based products.
“I had a client with four Spotify accounts and didn’t know there was a family plan. I had another that didn’t know they had subscribed to six apple products and at only $5 to 10 a month each, those can add up quickly.”
To manage this balance, he said to identify your discretionary expenses, such as streaming subscriptions or meal box deliveries and evaluate their necessity.
Dining Out
“Dining out has of course always been more expensive than cooking at home and now that gap is growing even wider,” Stearn said. “The USDA predicted in February that the cost of dining out would increase a whopping 4.7% this year. Compare that to a projected increase of only 0.4% in grocery prices.”
“Even if you paid a bit more for higher-end ingredients to create more interesting meals at home, this growing price difference means you’d most likely still come out well ahead.”
Entertainment
Movies, video games, theater — whatever form your entertainment takes, Stearn said it’s worth dialing back and finding more affordable or even free entertainment so you can save money for the life you want.
“This can give you a good opportunity to be creative too,” he said. “Walking in your own neighborhood can get you some exercise, fresh air and time to notice things that just whizz by in a car.”
“You could go camping or hiking, participate in karaoke, trivia or gaming nights,” Stearn said. “Or visit your local library, where you can check out books or videos for free or participate in classes, readings or other free activities.”
Gym Memberships
“Health and fitness are crucial, but a gym membership is not,” Stearn said.
“You can do a wide variety of workouts with no equipment at all or with some inexpensive free weights,” he said. “Walking, running, push-ups, sit-ups, jumping jacks — the list is basically endless. And you can find tons of equipment-free workout routines on YouTube for free.”
He also said that you can find some great, barely used fitness equipment at sports resale stores. “That’s because people often buy top-of-the-line gear with the best intentions and then find they just aren’t going to stick with it.”
Understand the Impact of Your Discretionary Spending
“When it comes to short-term, discretionary expenses, it’s crucial to understand their impact on your financial health,” Hall said.
“These expenses range from simple pleasures like planting trees in your yard, getting tattoos, to maintaining subscription accounts,” he said. “While these can add value to your life, it’s essential to evaluate them critically against your savings goals.”
Use a ‘Categorizing Joy’ Approach
“One of my colleagues recommends a practical exercise: review your bank statements, categorize your expenses and rate them based on the joy they bring you,” Hall said.
“If an expense doesn’t bring joy and is merely a waste, it’s time to cut it out in favor of savings.”
Budget for ‘Fun’ Money
“However, to maintain financial discipline while allowing for some indulgence, I suggest creating a ‘fun money’ allocation in your budget,” Hall said. “This is a dedicated amount you can spend guilt-free each month literally burn it if you want to, ensuring your budget remains intact and your savings goals on track.”
“By allocating $50 or $100 or whatever your budget states for spontaneous purchases, you satisfy your natural impulses without derailing your financial plan,” he said.
Remember, There’s No Universal Rule on Saving
“I believe there’s no universal rule on what to prioritize over saving,” Hall said. “Personal joy and happiness are paramount. For instance, if smoking brings you joy, that expense may outweigh the need to save at that moment.”
“The key lies in finding a balance that works for you,” he said.
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