Almost all of us have holes in our budgets. And as with other kinds of leaks, you may have hardly noticed some of them. But those small drips can quickly add up to big bucks. The trick is to find the holes and plug them so you can keep more money in your pocket. That extra cash could be the ticket to finally being able to save, invest or break the cycle of living from paycheck to paycheck.
We've updated our popular list of money-wasters for 2014 with even more tips and resources to help you cut unnecessary expenses from your budget. Consider these 30 common ways people waste money. If any of them sound familiar, start plugging your budget holes right away.
Buying at the Wrong Times
Timing your travel purchases right can also help you save big. Fares for domestic flights are at their lowest, on average, 54 days in advance, according to a study by CheapAir.com. For flights to Europe, you'll get the lowest fares by booking 319 days in advance (see When to Book Flights to Get the Lowest Fares). And to get the best rate on a hotel room, you typically need to book a stay 14 to 21 days in advance (see How to Get the Best Deal on a Hotel).
Tossing Food Based on the Expiration Date
There's a good chance you're throwing away hundreds or even thousands of dollars' worth of food each year before it has gone bad if you're using sell-by and expiration dates as gauges for whether food is still edible. These dates are just manufacturers' best guess of when food is at peak quality and are not related to safety, according to Emily M. Broad Leib, director of the Harvard Law School Food Law and Policy Clinic. Because of confusion over food date labeling, a family of four spends between $1,365 and $2,275 per year, on average, on food that is wasted.
Consumers can usually expect food to be safe for another five to seven days past the sell-by date printed on the package. The best test to tell if something is still good is to smell it or take a small bite. To learn more, see Confusing Packages Lead to Wasted Food, Money.
Paying Checking Account Fees
Community banks and credit unions, in particular, are more likely to offer free checking. You can search for a community bank near you at the Independent Community Bankers of America site and look for credit unions at www.culookup.com or www.asmarterchoice.org.
And sometimes free checking is a perk with brokerage accounts.
Always Opting for the Senior Discount
Many businesses offer discounts for older adults. But often these special rates aren't that special and seniors would be better off taking advantage of other deals available to consumers of any age. For example, the Empire State Building, American Museum of Natural History, Metropolitan Museum of Art, Museum of Modern Art and Circle Line Cruises in New York City all offer special rates for seniors. But seniors will pay even less to visit all of those attractions by purchasing a New York CityPASS for $109 (versus $131 if purchased separately with senior rates). For more, see Why Senior Travel Discounts Aren't Always the Best Deal.
Not Adjusting the Thermostat
Shopping at the Wrong Store
For example, you'll get the best deal on cleaning supplies, personal grooming items, greeting cards, gift wrap and bags at dollar stores. You can get a gallon of regular milk for 50 cents to 60 cents less at the supermarket than at a warehouse club, and higher-end grocers, such as Whole Foods and Trader Joe's, tend to have the lowest prices on organic, almond, soy and other specialty milks. You'll save nearly 70% per unit on batteries if you buy them in bulk at a warehouse club, such as BJ's Wholesale Club, Costco or Sam's Club, rather than the drugstore. See Best Buys at Warehouse Clubs, Grocers and Big-Box Stores, What Not to Buy at Drugstores and What to Buy at Dollar Stores.
Paying Foreign Transaction Fees
If you need cash, wait until you arrive at your destination to get foreign currency. Then go to a local ATM -- it is the cheapest way to get currency, often at a wholesale rate. For more ways to avoid or limit conversion fees, see Save Money on Your Money When Traveling Abroad.
Carrying a Balance
Buying Brand-Name Instead of Generic
From groceries to clothing to prescription drugs, you can save money by choosing an off-brand over a fancy label. And in many cases, you won't sacrifice much in quality. Clever advertising and fancy packaging don't make brand-name products better than lesser-known brands.
For example, generic drugs can cost as much as 80% less than their brand-name alternatives. The lower list price makes a huge difference when you're in your insurance plan's deductible period and paying the full price out of your pocket. The coinsurance rates are usually lower, too -- often 10% to 15% of the cost for generics, 25% for preferred brand-name drugs, and 50% for nonpreferred brand-name drugs.
Paying Late Fees and Missing Deadlines
If you pay a stack of bills every month, it's easy to overlook one or two every now and then. But if you miss a credit card payment by even one day, you will pay a late fee of $25 ($35 if it's the second time in six months). Your credit score could also take a hit if you pay your bill late. Your history of on-time payments accounts for 35% of your FICO credit score -- more weight than any other factor. If you pay the bill within 30 days of the due date, the lender might not report the delay to the credit bureaus. But if you let the bill go longer than that, the card issuer is more likely to inform the credit agencies and turn over your case to its collections department.
SEE ALSO: 25 Ways to Earn Extra Cash
If you have a good payment record -- especially if you have paid on time for an entire year -- call your card issuer and ask that the late fee be waived. To avoid missing deadlines, set up payment alerts to be delivered by e-mail or a text message from your credit card company.
Buying Insurance You Don't Need
You only need life insurance if someone, such as a child, is financially dependent on you. That means most singles, seniors and kids don't need a policy.
Other policies you can probably do without include credit-card insurance (better to use the premium to pay down your debt in the first place), rental-car insurance (most auto policies and credit cards carry some coverage) and mortgage life insurance (a regular term-life insurance policy is more comprehensive). See 5 Insurance Policies You Don't Need for coverage that isn't worth buying.
Overspending on Gas and OilThere's no need to spring for premium fuel if the auto manufacturer says regular is just fine.
If your car can use flex fuel -- a blend of 85% ethanol and 15% gasoline -- it still might be more cost effective to stick with regular gasoline. Even though the average price of flex fuel currently is less per gallon than gas, vehicles get fewer miles per gallon with it because ethanol contains less energy (see Will Flex Fuel Save You Money? to learn more). To lower your gas costs even more, consider one of our picks for the 14 Most Fuel-Efficient Cars, 2014.
And are you still paying for an oil change every 3,000 miles? Many models nowadays can last 5,000 to 7,000 miles between changes, and some even have built-in sensors to tell you when it's time to change the oil. Check your owner's manual to find the best time for your car's routine maintenance.
Keeping Unhealthy Habits
Once you kick your bad habits, you'll save even more if you institute these six healthy habits.
SEE ALSO: Reasons You're Still Broke
Paying Too Much for a Mutual Fund
Mutual fund fees can weigh down performance. The average mutual fund expense ratio is 1.08%. If your fund isn't beating its benchmark, you're better off buying a low-cost index fund or exchange-traded fund that matches the benchmark. For example, you'll pay an annual expense ratio of just 0.05% to invest in the Vanguard Total Stock Market ETF (VTI), which tracks the CRSP US Total Market Index. On a $50,000 investment, that's a savings of more than $500 per year over the average managed fund.
It is possible to outperform a benchmark with a well-managed fund (although it's not guaranteed). Stick with no-load funds, which can save you more than 5% in sales charges. See our favorite no-load mutual funds in the Kiplinger 25. And watch out for other nickel-and-diming, including low-balance fees or charges for paper statements.
Passing up Tax Breaks
Opting for a Low Insurance Deductible
A low deductible may seem appealing as you ponder a costly claim down the line, but you'll pay a lot more in higher premiums. Boosting your deductible from $200 to $500 can reduce your collision and comprehensive auto insurance premiums by 15% to 30%; raising it to $1,000 can save you 40% or more. If your homeowners insurance deductible is $500, increasing it to $1,000 can lower your premiums by up to 20%. Besides, when you have a low deductible, you might be tempted to file claims more frequently for small amounts. Insurers don't like frequent claims on your record and can punish you with higher rates.
Before raising your deductible, however, make sure you have enough cash in your emergency savings account to cover it if you ever file a claim. You won't have to rely on costly credit cards to bail you out.
Leaving Your Money in a Low-Interest Account
If you're stashing your cash in a traditional savings account earning next to nothing, you're wasting it. Make sure you're getting the best return on your money. Search for the highest yields on CDs and money market savings accounts. And consider using a free online checking account that pays interest, such as ones offered by Ally Bank and EverBank.
For more ideas, see 10 Best Ways to Earn More Interest on Your Savings.
Paying ATM FeesExpect to throw away nearly $4 every time you use an ATM that isn't in your bank's network. That's because you'll pay an ATM surcharge, and your own bank will hit you with a non-network fee. Consider switching to a bank, such as Ally Bank, that doesn't charge ATM fees and reimburses you for fees other banks charge. Another way to avoid fees if there's not an ATM in your bank's network nearby is to get cash back when you make a purchase at the grocery store or drugstore.
Not Pulling the Plug on Electronics
U.S. households waste $100 a year, on average, to power devices while they are off or on standby mode, according to Energy Star. Electronics that have a clock or operate by remote are typical culprits. The obvious way to pull the plug on your energy vampires is to do just that -- pull the plug. Or buy a device to do it for you, such as a Smart Strip Power Strip ($25.75 at www.smarthomeusa.com), which will stop drawing electricity when the gadgets are turned off and pay for itself within a few months.
Mismanaging Your FSA
Other people contribute to an FSA but fail to use all the funds in their account. Under the old rules, you lost any money left in the account after the deadline on December 31 -- or March 15, for plans that offer a grace period. The Treasury Department and IRS changed the rules in 2013, and employers can now allow their employees to carry over up to $500 in their FSA from one year to the next. However, employers aren't required to make the change. If yours hasn't, see these 7 Smart Uses For Your Flex-Account Money so you don't leave any funds behind.
Paying Full Retail Price
Sticking With the Same Service Provider
Hey, we're all for loyalty to trusted service providers, such as your bank, insurer, credit-card company, mutual fund, phone plan or cable plan. But over time, as prices and your circumstances change, the status quo may not be the best deal anymore. For example, American drivers overpay an average of $368 a year to insure their vehicles because they don't shop around for the lowest rates, according to a 2013 study by NerdWallet. So it's worthwhile to check at least once a year to see if other service providers can offer you better rates.
Buying New Instead of Used
Or you could save money by borrowing something from friends, family or neighbors, or using an online sharing resource, such as NeighborGoods.
Paying Credit Card Annual Fees
Saying Yes to Rental Car Add-ons
When you rent a car, the fees can add up quickly. One of the heftiest fees can be rental car insurance, or collision damage waiver, which can cost $20 to $30 a day. Rental car agents are trained to make this insurance sound nonnegotiable, but you probably don't need it. If the car is for personal use and you have collision coverage on your auto policy, you're covered. (Your credit card may pick up the deductible -- or become your primary coverage if you don't have any other insurance.)
There are plenty of other charges for add-ons, such as a GPS, which typically costs $13 a day. Bring your own. And think twice about paying for a full tank of gas ahead of time. You can fill up cheaper yourself, and you may not use a full tank anyway. See How to Avoid Unnecessary Rental Car Fees to learn more about the extras that companies want to charge you for and whether you really need them.
Paying for Credit-Monitoring Services
A credit-monitoring service can charge $15 a month or more to track your credit files. But you can get a report from each of the three bureaus -- Equifax, Experian and TransUnion -- free every year at AnnualCreditReport.com. Stagger your visits to the site so you get a report from one of the bureaus about every four months. You'll keep up with any changes without paying the fees.
Plus, a couple of services will send you updates from the credit bureaus free. Credit Sesame tracks data on your Experian report daily and will send you an e-mail alert if anything suspicious appears. (You need to sign up for alerts; notifications also appear on your account page on the site.) Credit Karma has a similar tool, which provides free daily monitoring of your TransUnion report. You also can get your full TransUnion credit report free at any time from Credit Karma, and a free Equifax credit report every six months from Quizzle.com.
Paying for Warranties
Odds are you won't need the extra coverage because most major appliances don't break down during the extended-warranty period. Or you might already be covered. The four major credit card networks -- Visa, MasterCard, Discover and American Express -- provide up to a year of extended warranty protection for some cardholders, according to credit card comparison site CardHub.com. See What You Need to Know About Warranties and How Credit Cards' Extended Warranty Coverage Stacks Up to learn more.
Not Planning Weekly Meals
And if you have food at home that can be quickly turned into meals, you'll be less tempted to stop at a fast-food joint, which isn't nearly as cheap as it seems. A family of four can easily spend more than $20 on a fast-food meal, but they can prepare a meal at home for significantly less.
Paying Too Much for Shipping
And for those that don't, you can find free shipping codes at FreeShipping.org, or you can take advantage of Free Shipping Day in December, when hundreds offer free shipping with guaranteed delivery by Christmas Eve. See 6 Things to Know About Free Shipping to learn more ways to score free delivery.
Going Overboard on Parties
And then there are weddings. Don’t get us wrong: We love weddings. We just don’t like the nearly $30,000 average bill that accompanies couples down the aisle. Starting your newlywed life under a crushing debt load is a bad idea. Rein in your wedding costs and do your marriage a favor. (And don’t foist that outrageous price tag on your parents, who are trying to save for retirement and may have just helped you pay for your education.) See Ways to Save on Your Wedding for advice.
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