Rachel Cruze and Nischa Shah: 3 Subtle Ways You’re Wasting Money
Written by
Adam Palasciano
Edited by
Jenna Klaverweiden
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It can be easy to waste money. Whether it’s spending too much on things you don’t really need, avoiding important financial conversations or not being proactive, you may find yourself harming your personal finances.
According to a Clever Real Estate survey, 74% of Americans admit to having an overspending problem. At the same time, 55% admit to spending recklessly. However, it doesn’t have to be this way. The first step to stop wasting money is to recognize your habits.
Personal finance expert Nischa Shah shared in a video ways you’re losing money without realizing it, and recently, money expert Rachel Cruze reacted to her list in a video and provided some of her own advice.
Here are three subtle ways you might be wasting money, according to Cruze and Nischa.
Also see five things the wealthy never waste money on.
Keeping Your Head in the Sand
Nischa’s No. 1 indication that you’re wasting money is keeping your head in the sand. She explained that people may avoid talking about or dealing with money because it’s uncomfortable.
Cruze agreed, explaining that you may be avoiding hard conversations in your life, not asking for a raise, not communicating with your spouse, not speaking to a financial advisor or even avoiding your bills, for example. She explained that this is an important thing to discuss and was glad it made No. 1 on Nischa’s list.
While you might feel stressed out or overwhelmed about finances, avoidance can be dangerous. When you choose to take an ambivalent approach to money, you may very well end up wasting money or missing out on financial opportunities.
Obsessively Comparing
Also on Nischa’s list is obsessively comparing ourselves to others. “We live in this extremely connected world through social media, and this means that you tend to see a lot of what others are up to, or a lot of what they have that you don’t,” she explained. As a result, you may compare yourself to your peers and spend beyond your means to “catch up” to them.
Cruze explained that she completely agrees. She said that people spend money — even money they don’t have — to maintain a certain level of living.
According to a recent LendingTree survey, 32% of Americans said they felt financial pressure to keep up with family and friends. However, taking on a “keeping up with the Joneses” mentality can lead to wasting money or, worse, landing yourself in debt.
Not Turning Your Capital Quickly Enough
Nischa explained that not turning your capital quickly enough could be wasting your money.
“When you’re just keeping [your money] in a bank account, it’s one of the most inefficient uses of your financial resources,” Nischa explained. “You’re not letting your money circulate fast enough to generate even more money for you.” If you have unused savings sitting in a bank account, for example, you may be missing out on potential growth.
Nischa explained some options to utilize your capital, including investing in education, diversifying income and investing in low-cost index funds.
Despite earning little interest with holding capital, Cruze said she was in the middle on this point. “Having money you can get to for an emergency fund is really important, and I don’t feel like you have to be investing all the time and creating all this crazy interest,” she said. “There is a part of having security and peace.”
However, once you have sufficient emergency savings, investing your money in ways that can help it grow could be beneficial. One option Nischa suggested was low-cost index funds. Take, for example, the Vanguard S&P 500 ETF (VOO). The Motley Fool called this fund a “must-buy.”
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