20 Ways You’re Throwing Away Money and How To Fix It

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.

Also here are 25 creative ways to help you save money.

It’s your money — you shouldn’t be charged to use it. If you really want to take your money further and save, look for a checking account with no fees so your money stays where it belongs — in your account. An excellent option is to search for online checking accounts with zero fees or account minimums. 

If you’re wondering how much you can save here, CNBC found that you can save around $15 a month by choosing a no-fee checking account offered by an institution like Ally Bank. 

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. 

For example, Business Insider found that the average return for the S&P 500 for the past decade was around 10.2%, so you would’ve likely experienced exceptional growth if you left your money in a simple index fund. 

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. The official website touts that you can save up to 40 cents a gallon with a premium membership. This means that your monthly savings would increase if you constantly put a significant amount of miles on your vehicle. 

Having a high-interest savings account can greatly increase your money’s growth rate, which is much faster than with a traditional account at a big bank. Research from Business Insider based on FDIC data shows that the average savings account had an interest rate of 0.46% APY and some online savings accounts offer ten times this amount.

Here’s an example of how much money you could be missing out on:

If you have $10,000 in a high-yield savings account with Ally earning a 4.20% APY, you will earn $420 in interest after a year. That same $10,000 sitting in a savings account earning 0.46% would earn you $46 after a year. This means you could miss out on $374 in interest if you set aside $10,000. The amount of money you’re throwing away will depend on how much you have saved. 

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.

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. Keep an eye out for these opportunities to take advantage of tax-free shopping.

Another major pain point is ATM fees, which can add up quickly if your banking provider charges outrageous fees for out-of-network use. Business Insider found that you can spend up to $5.50 per transaction with an ATM fee with some banks.

For example, a Bank of America customer would be charged $2.50 for using an out-of-network machine and then get dinged with a $3 fee from the provider. The ATM fees will depend on your bank, so it’s crucial that you review the associated costs. 

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.

According to the most recent data from the Federal Reserve Bank of New York and the U.S. Census Bureau, an American household’s average credit card debt was $7,951 and the total credit card debt balance reached $1.14 trillion. The most recent report from the Consumer Financial Protection Bureau (CFPB) found that Americans spent $130 billion on credit card interest and fees in 2022, according to CBS News.

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. The savings would depend on what you’re shopping for. 

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.

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.

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.

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.

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.

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 make an expensive decision to consolidate debt. As reported by USA Today, a balance transfer fee can be anywhere from 1% to 5% of your transfer amount. So, with a 3% transfer fee and $10,000 in credit card debt, your new balance would be $10,300 after the transfer is complete, costing you $300 to land a lower interest rate. As always, it’s essential that you run the calculations to ensure that the balance transfer makes sense. 

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. 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.

If you’re wondering about how much money you would be throwing away, the general rule is that when you withdraw funds from your 401(k) plan before your retirement age, you’ll be hit with a 10% penalty and you’ll have to pay taxes on the amount you withdraw.

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.

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.

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. If you do this long enough, the late payments could show up on your credit report and lower your credit score.

The Consumer Financial Protection Bureau (CFPB) recently finalized a rule to reduce the late payment fee from $32 to $8, according to the Consumer Financial Protection Bureau. The CFPB also estimates that American families would save over $10 billion in late fees from this new ruling. However, it’s worth pointing out that the amount you spend on late fees depends on how often you miss payments, with every mistake costing you up to $32.

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.

Martin Dasko, Lou Carlozo and Gabrielle Olya contributed to the reporting for this article.