Sometimes, I look at my bank account and think, “Where on earth did all my money go?” I believe even you have had this problem too! Don’t lie!
One day, all of a sudden this question popped into my mind. “Where does my money actually go?” So, I decided to Google it to find the answer.
The results I got were truly shocking. I never even knew that I was wasting money on things that felt like basic needs, but they were not!
They were just money traps set to steal money from people like us.
So, let’s see all these 10 top money traps one-by-one and how you can stop falling for them.
1. Credit Card Interest
Let’s start with the biggest creator of debt according to Google, which is Credit Card Interest.
According to report by Consumer Financial Protection Bureau, Americans pay over $120B every year in the name of credit card loans and fees.
If you’re using credit cards to purchase something, then you’re basically paying extra for everything you buy.
Remember that $50 bag you bought with your credit card last week? That probably cost you $65, instead of $50.
How to Fix it?
Try to pay off your balance each month. If not, look into balance transfer cards with 0% APR offers.
2. Extended Warranties
Yep, these little suckers that make you pay more.
Warranties do sound helpful and makes you feel like they will save you a lot of money later on, but most of them just put your money down the drain.
Why? Because most products either don’t break or even if they do, it’s after the warranty period is over. So, the warranty doesn’t make any sense.
The companies build their product in such a way that they will work fine till the warranty period mark. After the warranty period ends, it actually starts getting problems.
It may sound stupid, but by using this trick companies can extract more money from you legally.
Plus, a lot of major credit cards already offer purchase protection or extended warranties for free. So, paying extra for warranties is just a waste of money.
How to Fix it?
Instead of paying more for an extended warranty, set aside a small “just-in-case” repair fund.
If any problem arises with your product, then you can use that money to fix it.
But, if nothing happens to the product, at least till the warranty period, then the money you would have paid for the warranty gets saved.
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3. Subscription Services
Netflix. Spotify. Hulu. Disney+. Amazon Prime. Apple TV. YouTube Premium. And the list goes on…
I’m not telling you the names of major streaming companies. These are the companies that you pay hundreds of dollars every single month.
A study done by Rocket Money in 2023 found that the average American spends $219 per month on subscriptions. And nearly 42% of them say they forgot about at least one subscription that they’re still paying for!
People talk about rights, mental health, what and what not just to get a little increment in their salary. But when it comes to spending, they forget! It’s a crazy world we’re living in.
How to Fix it?
To be honest, you don’t have to pay to use most of these services. For example, YouTube. You can use YouTube for free without even paying. Then, why would you pay it. If watching a 5 second ad before a 9 minute video can save you $10/month, then hell yeah!
For those services that you need to pay to get access, do this thing!
Get only one service each month. Like, get Amazon Prime this month and watch whatever you want, get Netflix next month and watch whatever you like and so on.
This way, you can save money and watch your favorite movies and series without overspending on them.
4. Lottery Tickets
Who wouldn’t like to win a lottery? Personally, I don’t know anyone who wouldn’t! But what are the odds of you winning a lottery out of those hundred thousand people? It’s less than 0.01%, which basically translates to none!
So, buying lottery tickets is like gambling but with much lesser chances of winning. So, i would suggest you to gamble once in a while than buying lottery tickets.
Your chances of winning money gambling is much higher than winning a lottery. So, stop buying lottery tickets immediately.
Once in a while, it’s fine! But buying lottery tickets regularly can seriously question your financial decisions.
How to Fix it?
Instead of buying lottery tickets, put that money in your savings account or get a coffee. At least you’ll get some caffeine.
5. Brand-New Car
Let’s start this with a painful fact: A brand new car loses 20–30% of its value the moment you drive it off the lot, and up to 60% within the first five years, according to a report by Carfax.
And if you’re taking a loan to buy the car, then may god bless you! With rising interest rates, you’ll get stuck in a trap of debt. In fact, U.S. auto loan debt hit a record high of $1.66 Trillion in 2024.
So, say No-No to buying a brand new car until and unless you have enough money to do it.
How to Fix it?
Instead of buying a brand spanking new car, find a used, but reliable car and buy that. It will cost you a lot less and definitely won’t put you in debt.
Even if the value of that car depreciates, you won’t lose much money compared to the new car.
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6. Bank Fees
Most of us don’t consider bank fees as a big problem, but if you don’t pay them in time, they can add up.
From overdraft to maintenance fees, Americans pay over $15 billion a year in bank fees, according to Bankrate. So, paying these fees in time can save you a lot in long run.
These are Some Basic Banking Fees:
- $35 per overdraft
- $5 to $15 for ATM use
- $10 monthly account fees
How to Fix it?
To avoid these fees, you can use a fee-free online bank or credit union. And keeping an eye on your balance time and often helps too!
7. Convenience Spending
If you aren’t rich enough, then try to go less for convenient stuffs. Spending a little more time or putting a little more effort into some basic things won’t break your back or take your entire day. So, spending less on convenience can save you a lot of money.
By convenience, we’re talking about pre-chopped veggies, food delivery, same-day shipping, and those magical button-clicking apps that bring you stuff instantly. Even without paying more for these stuffs, you can get your things done.
It does feel good in the moment, but it’s slowly eating up your savings.
How to Fix it?
The best way to cut these expenses is by taking decisions in time and doing things yourself. If you want a scarf by tomorrow, why can’t you order it a week before? And if you can eat, then why can’t you peel the garlic yourself? It doesn’t even take that much time.
8. Food Wastage
This is something each and everyone of us faces every single day, even me.
Do you remember, how much food you buy thinking you’ll cook it this day, but you get home late or super tired and skip cooking it. After that you reach a point, where the food starts rotting and you throw it away!
Well, preventing this issue can save you a lot of money.
According to an estimate by USDA, nearly 30–40% of all food in the U.S. is wasted, which equals to about $161 billion worth of food per year. That’s like throwing your money straight in the trash.
How to Fix it?
Planning properly before going for grocery shopping can help a lot in solving this problem. Don’t forget to do a quick fridge check before going for grocery shopping.
Freezing and using the leftovers for next meal can help too!
9. Brand Name
Most people pay 5X more money for a 5X worse product, just because it’s from a reputable brand. If you’re rich enough, buy it! I can’t say anything to you. But if you’re someone making an average income, just lower your standards quite a bit.
Due to the tariffs recently, most of you got to know that even the goods from luxury brands are made in the same factory where the cheap goods are made. The only difference in those so-called luxury goods is the brand labelling printed on them.
So, buying cheaper products can be a better financial decision and a lot of times, cheaper products comes out to be of better or the same quality as the expensive product.
How to Fix it?
Go for cheaper, non-labelled products. They cost less, but serves the same purpose as the expensive ones.
10. Disorganized Spending
Buying something without proper thinking can be a big personal finance disaster. Even if it’s a cheap product, but you buy such things frequently, then they add up a lot faster than you think.
A study done by U.S. Bank concluded that only 41% of Americans use a budget. Believe me, this is a major reason why most people live paycheck to paycheck. They don’t get their salary on time and they will have nothing to eat.
How to Fix it?
Creating a weekly or monthly budget and tracking your spendings is the best way to avoid these expenses. And planning twice before buying something can help you to make better decisions too!
Wrapping it Up
So, these were 10 major money wasters according to Google. I’ve also included some simple ways to get rid of these spending habits.
Remember, saving money doesn’t mean you have to live like a monk. Saving means trying to get the most by spending as less as possible without sacrificing your needs and comforts.
So, if you’re spending a lot of money on any 10 of these money wasters, try to cut them as much as possible.
