You Could Be Losing Money Without Realizing It — Here’s How, According to Rachel Cruze
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Peter Burns
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Gabrielle Olya
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No one likes losing money. People may go out of their way to find the best deals and offers to save a dollar or two but be unaware of the things draining their bank accounts.
Inspired by a fellow YouTuber Nischa Shah, Rachel Cruze, a personal finance expert and co-host of The Ramsey Show, pointed out some of the most overlooked culprits for financial losses on a recent YouTube video.
Here are five ways you might be losing your hard-earned cash without realizing it.
Keeping Your Head in the Sand
“Ignorance is not bliss when it comes to your money,” Cruze said. “People really do avoid this topic when it comes to their life, and understandably, because there is a lot of stress [and] maybe there’s some shame or regret for decisions they made.”
Don’t let emotions cloud your understanding of your financial situation. Cruze emphasized the importance of knowing where you stand and having a clear grasp of financial concepts to avoid wasting money. Staying aware and proactive can help get you back on the right track.
Keeping Up With the Joneses
Today, social media makes it all too easy to compare what you have to someone else’s latest purchase. This peer pressure can actually lead to increased spending. A LendingTree survey found that 40% of the Americans questioned had overspent to impress others, and 27% of those people were already in debt.
When talking about social media pressures, Cruze said, “You feel like this standard of living, ‘this way I should be living,’ should be normal. And if I’m not up here, I’ve got to spend money, maybe money I don’t have, to fill that gap.”
These pressures might provoke you to spend more on things than what you have budgeted, causing you to lose more money.
Being Financially Ignorant
Another reason to lose money is not having enough financial knowledge. Currently, only 35 U.S. states require high school students to take a finance class to graduate. Even those lucky enough to have learned some personal finance in school can still have poor financial health.
Nischa called this “keeping your head in the sand” and bundles those less educated about finances with those who purposely ignore their financial health for convenience. Cruze is glad Nischa made this point, saying, “This is an important one to have on the list, and I like that she has it number one because ignorance is not bliss when it comes to your money.”
Cruze also pointed out that many people avoid having difficult monetary conversations with their partners or are averse to making sacrifices to improve their financial health.
Not Putting Money Away
People living paycheck to paycheck might find it challenging to think about putting some money away. As of December 2024, America’s average personal savings rate was 3.8% of an individual’s disposable income. So, finding ways to live on 90% or less of your income can greatly improve your finances in the long run.
Cruze explained that the personal savings rate can differ from person to person depending on their financial situation. Whatever the final number is, it’s important to not spend everything you earn. She said, “Getting a $1,000 emergency fund and then becoming debt-free is key.” Once you’ve done this, you can begin investing money and earning a passive income.
Not Tracking Expenses
Finally, to realize where you’re losing money, you need to know where you’re spending it. An Empower survey found that 42% of Americans go shopping every month to treat themselves. Such habits can become a problem when you don’t keep a tab on how your spending adds up over time.
Cruze said, “Our spending can be so out of control. And we don’t realize where our income’s going. We just spend and spend and spend and don’t realize it versus saying, ‘Hey, I’m actually going to have a plan for where my income is going to go.'”
By tracking your expenses, you can decide where to spend your money and where to cut back. While this may sound tedious at first, budgeting apps can make this task much more achievable. After connecting to your bank account or credit card to such apps, you can automatically document your spending information and save money.
Amen Oyiboke-Osifo contributed to this article.
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