You probably don’t realize all the ways you’re wasting money and leaving free money on the table — and these little missteps can add up to big dollar losses. Fortunately, once you’re aware of these bad money behaviors, you can take steps to change them. Making small tweaks to your lifestyle and spending habits could pay off in a big way.
Keep reading to find out the costly money mistakes you’re making — and how to stop making them so you can keep more money in your wallet.
Last updated July 9, 2019.
Throwing Money Away on Layaway
While layaway might seem like a sensible way to hold onto something you want to buy, it’s not always a smart way to net savings. That’s because layaway locks you into a certain price and — if ultimately financed by a credit card — additional interest charges.
Not Using a High-Interest Savings Account
Having a high-interest savings account can help you grow your money and build an emergency fund more quickly than with a traditional bank account — so if you don’t have one, you’re leaving free money on the table.
The average savings account interest rate is 0.10%, according to the Federal Deposit Insurance Corp., but high-interest savings accounts can offer rates that are a whopping 18 times higher. For example, PenFed’s Premium Online Savings Account has a 1.70% annual percentage yield and no monthly maintenance fee. And with a $5 minimum to open an account, this option is an easy way to begin growing your money.
“The biggest mistake consumers make is that they keep their savings in the same branch bank they keep their checking account. Consumers think they are earning more on their savings than their checking balances, but often there is almost no difference in the rate on the two accounts. Online savings accounts deliver consumers so much more value. Plus, because consumers can easily link their new savings account to their existing checking account, there’s no need to change banks,” said Thea Mason, vice president of deposit products at PenFed.
Trying To Time the Stock Market
When stocks are on the rise, it’s tempting to think you’re smart enough to know when to get in and out to make a killing. But this move is one of the worst mistakes rookie investors make.
Experts say it’s nearly impossible to do this correctly every single time. After all, you need to be right twice — when you get out of the market and when you get back in.
Ignoring Refurbished Goods
It’s easy to dismiss refurbished electronics as rejects or factory failures. The truth is, many items are returned for trivial reasons, like being the wrong color. Even then, manufacturers subject these returned projects to rigorous tests. And the difference in price between refurbished and new usually starts at 10% and can be as much as 50%.
Closing the Box on ‘Open Box’ Savings
A great way to save money when shopping online marketplaces such as eBay is to see if a vendor has cheaper, brand-new “open box” products, which are returned items that have been inspected and put back on shelves by retailers.
Paying Full Price for Gas
Even though gas prices aren’t at their highest, you might not be taking advantage of free ways to drive the bill down further, such as by using rewards credit cards for cash back. Make sure to pay off your balance every month to avoid interest charges or late fees that’ll eat up any rewards you earned. You can also use the GasBuddy app to find the lowest gas prices in your area.
Paying Full Price for Anything
With bargain sites such as Groupon, it’s a wonder why people shop at stores and pay the manufacturer’s suggested retail price on anything — it’s probably one of the biggest ways you’re wasting money. Take advantage of coupon and deal sites to keep more money in your wallet year-round.
Forgetting Your Company’s Employee Stock Purchase Plan
Your company’s employee stock purchase plan typically works by payroll deduction, with the company converting the money into shares at up to a 15% discount off the market price.
“If you immediately liquidate those shares every time they’re delivered, it’s like getting a guaranteed 15% rate of return,” said Dave Yeske, managing director at the wealth management firm Yeske Buie.
Paying Checking Account Fees
What’s your bank’s policy on checking account fees? Some banks waive monthly fees for new customers during a promotional period, but will then charge as much as $10 or $12 per month if you don’t meet certain balance requirements.
Be aware of these terms and conditions so you can maintain a balance that won’t incur fees. If you can’t meet requirements, talk to a banker about switching over to a free checking account — or switch to a better bank.
Paying Sales Tax
Sales tax can add up over the year, especially in places such as Chicago, where it’s a hefty 10.25%. But thankfully, many states offer tax-free shopping weekends, which would be a good time to make any major purchases. So, keep an eye out for any opportunities to get goods tax-free.
Not Having a Shopping Accountability Partner
One big problem with shopping at the mall alone or online is the lack of accountability. Spouses — or friends — can do each other a favor by being accountability partners and asking questions like, “What’s being spent? Is it being spent wisely? How’s the budget holding up?” The idea here is not to police money, but to gently steer things back when your friend drifts off course.
Not Shopping Ahead for Next Year
The worst time to buy Halloween paraphernalia is the month before, and the worst time to buy winter gear is in the winter. So, why not buy your fall clothes for next year when they’re “so last season” and stores are eager to dump them to make room for high-priced items? Buying items one to three seasons behind their price peak means you’ll get a bargain.
It’s tempting to spend money on impulse buys when you’re caught up in the passion of sales galore. But you wouldn’t want to come home from the supermarket with a 20-pound cheese wheel you bought on a whim — right? Make a list of what you need at the store and stick to it.
Running Up Balances on High-Interest Credit Cards
Don’t get carried away with frivolous purchases — the last thing your wallet needs is a shopping spree. Credit cards can put you on a hamster wheel where making minimum payments barely nibbles at the balance.
If you do have a high credit card balance, don’t fear — you can erase it by prioritizing it and not adding to it.
Missing Out On Matching Contributions
An estimated two-thirds of Americans are not contributing to a 401(k), according to a 2017 study from Vanguard, meaning they are missing out on employer matching — which is basically leaving free money on the table. Don’t be one of these people — take advantage of this free money that can fund your retirement.
Lacking a Clearly Defined Plan
From shopping trips to investment moves, it’s futile to sweep the numbers under the rug and hope for the best. You need a plan to get the most out of your money and avoid costly errors.
Part of your financial planning process should include having an emergency fund, and the best way to build one up is through a high-interest savings account. This way, all the money you put in will accrue interest at a high rate, so you’ll be financially prepared for any curveballs life throws your way.
“In addition, you don’t have to move your checking account to open a high-yield savings account. You can simply link your online high-yield savings account to your checking account and transfer money online between the two accounts. This makes it easy to transfer money between your checking account and an online high-yield savings account,” said Mason.
And then beyond using your account for an emergency fund, you can also use it for important events. “Online high-yield savings accounts are a great way to save for a vacation, new car, new house, or your kid’s college education,” said Mason.
Spending Too Much While Eating Out
Sure, you don’t know how to make Thai food and don’t feel like cooking dinner. But consider how that attitude drains your wallet over time.
Say you eat out for lunch five times a week and spend $15 on each meal. That’s $3,900 you spend a year. By eating out for lunch just two times a week instead of five, you save $2,340.
Not Inflating Your Tires Properly
Keeping your tires properly inflated can improve your gas mileage by up to 3%, according to FuelEconomy.gov. Imagine that: A little bit of air keeps gas prices from inflating.
Confusing Needs and Wants
Whether you’re looking for discretionary cash or more investment funds, it’s too easy in the budgeting process to overlook places where you blow your dough. But, understand what is a need — food, housing, clothing, transportation — and what is a want. Hint: The newest designer handbag and a luxury sports car are not needs.
Giving To Wasteful Charities
Charities shouldn’t be painted with a broad brush; some make much better use of your donations than others. A good first step is to check out a nonprofit at the Charity Navigator website, which breaks down the particulars for thousands of charities.
Gambling is an epidemic in this country, and compulsive gambling is a very real disorder affecting an estimated 10 million adults in the U.S., according to the North American Foundation for Gambling Addiction Help. But the simple fact of the matter is that casinos and gambling parlors aren’t built because people win more than they lose.
Neglecting New Customer Specials
Whether you’re heading to the new hair salon in town for the first time or getting chiropractic treatment from a wellness center, don’t forget to ask about new customer and client specials. Some small-business owners who offer personal care and wellness services want repeat business and will invite new customers to come in and try their services at a discounted rate.
Skipping Happy Hour Specials
You might not be extremely hungry come happy hour, but this is the perfect time to enjoy a meal at your favorite restaurant at a discount. You can take advantage of buy one, get one free deals on many drinks and appetizers, and turn your entire visit into an early dinner.
Not Clipping Grocery Coupons
Whether you need to stock up on snacks or cereal, don’t forget to check your newspaper for this week’s coupons. If you don’t have access to the newspaper, check out the store’s circular and other special offers on products you buy every day so you aren’t paying extra on each grocery run.
Skipping Important Warranties
Vehicle warranties can cover some of the costs of many common car repairs and end up saving you money in out-of-pocket expenses every time you head back to the dealership or garage. Seek out a warranty you can afford, but read the fine print — some third-party warranty providers often have many restrictions and limitations.
Along with that, make sure your smartphone is protected with at least a basic phone warranty. That way, you don’t rack up a bill of a few hundred dollars just to replace a cracked screen or a power button.
Leaving Unused Electronics Plugged In
If you leave the house in a hurry and forget to unplug the coffee maker or leave lamps and small appliances turned on all day, you’re wasting energy. Lower your energy bill by unplugging any appliances you aren’t using at any given time. From shaving tools to laptop computers, it pays to unplug.
Grocery Shopping When You’re Hungry
If your grocery store bills are always high, you might be buying much more than you actually need. Shopping on a full stomach could be all it takes to trim that grocery bill. So, the next time you head to the supermarket, eat a meal or a snack to resist the urge to buy food you really don’t need.
Ignoring In-Store Savings Apps
Many retailers and drugstores, including Target and Walgreens, have smartphone apps that help you find coupons and discounts on your purchases. Ignoring these apps could keep extra dollars on your bill, so pull out the smartphone as you make your shopping rounds.
Making Pricey Credit Card Balance Transfers
If your favorite credit card issuer is offering you a low-interest or zero-interest balance transfer, don’t make the mistake of transferring thousands of dollars over without reading the fine print. Many credit card companies charge balance transfer fees as a percentage of the total transfer, so you could end up paying a few hundred dollars in transfer charges that negate the benefits of a lower interest rate.
Take the time to calculate the total cost of the balance transfer so you don’t end up making an expensive decision in an effort to consolidate debt.
Tapping Your Retirement Fund for Extra Cash
Dipping into your retirement fund to finance emergencies is one thing — financing a kitchen renovation or taking a cruise with your retirement dough is another. Not only might you run into high penalty fees, but you’ll also miss out on the compound interest you would have earned on whatever money you take out.
If you want to save for a home improvement project or vacation, a better way to do this is with a high-interest savings account, like PenFed’s Premium Online Savings Account. High-interest savings accounts allow your funds to compound at a high rate, but there’s no penalty for making withdrawals whenever you want to.
When you’re buying grocery and household staples such as rice, oatmeal and cleaning supplies, being loyal to a particular brand might be costing you. Unless you’re using coupons, you can save money on staples just by switching over to a generic brand.
Stocking Up On Bottled Water
You know you need to drink eight glasses a day, but don’t let that goal of staying hydrated burn a hole in your wallet. Save some money by investing in a water filter so you’re only paying for replacement filters after your initial purchase.
Paying High Shipping Fees
Pay attention to shipping charges posted at checkout, or you could be overpaying for items that otherwise qualify for free shipping. Many stores will ship items for free when your order is above a certain dollar amount, for example. And, some stores offer free shipping year-round.
Combining orders to meet the minimum and planning ahead can help you offset the cost of your next online purchase.
Neglecting Your Gym Membership
Less than half of Americans with gym memberships make it to the gym at least twice a week, and 6% of those with memberships never actually go, according to a 2019 study by Finder.com. You could be losing dollars a day just by skipping a few workout sessions a week or neglecting your fitness regimen altogether.
Consider the cost of not going to the gym the next time you contemplate skipping a workout. If you’re not using your membership, talk to the gym about canceling your membership or putting it on hold.
Missing Post-Holiday Sales
If you’re the party planner of the family, love to decorate or just enjoy arts and crafts, don’t overpay for supplies. From party hats to Christmas decorations, you can find a wide range of party supplies and craft items on sale at party stores and craft stores right after a major holiday. This is the perfect time to stock up on holiday-themed items as well as decor and craft supplies you can use year-round.
Buying Gift Cards at a Store or Restaurant
The next time you’re thinking about buying a gift card for a friend or family member, don’t buy it directly from the store or restaurant. Instead, shop warehouse clubs like Sam’s Club or Costco to buy cards at a higher value but for less.
You can find gift cards for fast food restaurants, chain restaurants and more with values of $25, $50 or more — but the actual price you pay is a few dollars less. Also, you can purchase discounted gift cards through sites such as Gift Card Granny, Raise and Cardpool.
Not Signing Up For Email Offers
When you’ve found your new go-to online retailer for home furniture, personal care items or makeup, don’t pay the full retail price on your first order. Many online retailers will offer a discount on your first order if you sign up for their email newsletter. And other stores send freebies, exclusive discounts and special offers to email subscribers throughout the year.
If you miss out on these offers, you could be paying extra on your first and future orders.
Doing Last-Minute Grocery Shopping
You already know a trip to the supermarket on an empty stomach is never a good idea, but don’t make another common grocery shopping mistake: not waiting for weekly sales to begin. Take the time to map out your grocery strategy and make note of available deals and coupons so you’re paying the lowest possible price at any given time.
Not Using All Your Warehouse Club Benefits
You make the effort to pay your annual membership dues, so take full advantage of warehouse club member benefits — beyond having access to the store.
From discounts on eyeglasses to travel, you can save money on a variety of services and products. Review your membership agreement to learn more about perks beyond grocery, clothing and household item discounts available to you.
Missing Bill Payments
If you don’t open your mail regularly or keep track of bill due dates, it’s easy to fall into the trap of playing catch-up when you realize your bills are overdue.
Most companies will charge you a late fee, and some credit card companies might cancel your promotional rate if you fail to pay on time. Do this long enough, and the late payments could show up on your credit report and lower your credit score.
Choosing Valet Parking To Save Time
When you’re running late and need to be at an event, you might not have the time or patience to find a parking spot near your destination. So, you take advantage of valet parking to save time — but you end up throwing away money in the process.
Unless you’re prepared to spend $5 to $10 or more plus a tip for each event, map out a low-traffic route and leave as early as possible so you don’t have to pay extra just to park your car.
Buying Food at Sporting Events
You’ve probably already spent a pretty penny on tickets to cheer on your favorite sports team. So, stay within budget by taking care of food purchases outside of the stadium.
Many sports venues charge higher prices on snacks and meals because they know attendees have few options. Eat a bigger meal on game day before you head to the field or pack a few snacks for the road so you don’t have to buy food at the stadium. Read the event rules beforehand to make sure you can bring your snacks into the venue; otherwise, you’ll have to throw your food — and money — away.
Paying Gym Signup or Initiation Fees
You’ve recommitted to your fitness routine, so buying a new gym membership is probably at the top of your priority list. But as you start searching for your ideal workout destination, don’t waste money on signup fees and other costs that you can easily avoid.
New gyms opening up in your neighborhood might offer free passes and discounts for new members. If so, take advantage of those deals. You might even be able to get fees waived with your AAA membership.
Parking at Hotel Restaurants
Treating your significant other to a gourmet meal or planning a special gathering at a hotel restaurant can be a splurge-worthy venture, and you’ll find plenty of parking at the hotel. However, guests who aren’t staying at the hotel often are charged a daily parking fee as they exit the gate. Ask the restaurant or hotel’s front desk to validate your parking so you aren’t paying an extra $20 per visit.
Skipping the Dentist
If you’re experiencing any discomfort with your teeth, don’t delay your dentist appointment. Schedule an appointment and make room in your budget for dental products your dentist might recommend. Delaying your dental visits could lead to costly dental treatments in the near future.
Skipping Your Annual Doctor Visit
If you’ve been skipping your annual doctor visits in an effort to save on the co-pay or because you don’t think you have any serious medical issues, you might be setting yourself up for costly health problems down the line. Make full use of your insurance benefits and budget for additional visits your doctor recommends so you aren’t putting your health at risk.
Not Shopping Around To Fill Your Prescription
When the doctor recommends a prescription drug, don’t assume your insurance will cover everything. Depending on your insurance provider, you could be responsible for a co-pay on all prescriptions or have to pay a portion of the cost out of pocket. When that’s the case, shop around for the best prices at drugstores and pharmacies in the area.
Consumer Reports found that your next prescription drug could cost as much as 10 times more at one pharmacy over another. Explore options at a warehouse club or even stores such as Target, Walmart or your supermarket to get the best deal. If you can, ask for the generic version of your prescription to save more.
Not Taking Advantage of Company Wellness Benefits
If you work for a corporation or a larger company, your employer might offer health and wellness perks in addition to health insurance benefits. Many promote these benefits as a way to encourage work-life balance. Don’t waste your money on a gym membership, chiropractic adjustments or even counseling services before you see if your employer offers to foot some or all of the bill.
Buying Products at the Salon or Spa
You walk out of the salon or spa with a bag full of fancy products your stylist or massage therapist recommended so you can recreate the experience at home — but you probably burned a small hole in your wallet by doing so.
Instead of giving in to the expensive massage oil or shampoo, have a little patience and save your money. When you get home, check out online megastores such as Amazon to find authentic brand-name products at a discount. Or, pamper yourself with DIY spa treatments.
Ignoring Rebate Offers
It’s easy to miss rebate offers that are not heavily advertised in store circulars or even listed next to an item for sale. But before you make a purchase, ask the retailer if there are any manufacturer’s rebates available. Then, compare prices online and offline so you’re paying the lowest possible price.
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Last updated July 9, 2019.
About the Author
Sabah Karimi is an award-winning writer with more than 10 years of experience writing about personal finance, lifestyle topics, and consumer trends. Her work has appeared on U.S. News & World Report, Business Insider, Yahoo!, AOL Daily Finance, MSN, and other mainstream publications. She was interviewed by The Wall Street Journal and CBS News about her work as a freelance writer early in her career and now works with a variety of clients.