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Cutting Out These 25 Expenses Will Save You $14,992.52 a Year

John Csiszar
Cutting Out These 25 Expenses Will Save You $14,992.52 a Year

When it comes to living expenses, the truth is that most Americans subsist on a very thin margin. fifty-nine percent of Americans are living paycheck-to-paycheck to make ends meet, according to a recent survey from Charles Schwab. The good news is that if you take a closer look at how you live, you’ll likely find many areas in which you can trim expenses and give yourself an extra buffer. See what expenses you could cut from your budget, how you can save thousands of dollars in the process, and how you can invest the money better instead.

1. Credit Card Interest

  • Monthly Savings: $53.09
  • Annual Savings: $637.16

Every month that you don’t pay your full credit card balance you’ll be charged interest. That’s essentially money you’re throwing away. The average American has a monthly credit card balance of $6,506. About 43% of cardholders carry a balance on their cards month-to-month. With an average APR of 17.61% interest, many Americans can save big on fees by getting rid of their credit card debt.

Let’s assume you’ve built up credit card debt of $6,506 and it will take you a year to pay it off. By the end of that year you’ll have paid $637 in interest, according to Capital One’s interest calculator.

2. Life Insurance

  • Monthly Savings: $21
  • Annual Savings: $252

Life insurance is an essential benefit for many because it provides protection for spouses and heirs in case the primary breadwinner dies unexpectedly. This can be especially important if the family has a mortgage or other debts to pay off. About the least you can expect to pay is around $21 a month for a $500,000, 20-year term policy, according to Consumer Reports.

But if you’re young and single, you likely don’t need life insurance. If you’re paying for your own life insurance, look for a job with employer-paid life insurance.

3. Brokerage Commissions

  • Monthly Savings: $50
  • Annual Savings: $600

Traditional, full-service brokerage firms like Edward Jones, Morgan Stanley and Raymond James might charge hundreds of dollars per trade, depending on the size and type of investment. At Edward Jones, commissions start at 2.5% of the principal amount invested or a minimum of $50. Investing $2,000 every month means spending at least $50 on fees.

Well-known, reliable discount brokers like Fidelity still have brick-and-mortar branches and charge only $4.95 per online stock trade. To cut costs even more, you can do your trading with online-only broker Robinhood, which receives zero commissions on stock trades.

4. Investment Costs

  • Annual Savings: $1,437.50 for a $25,000 investment in a load vs. no-load fund

Pay attention to the costs attached to the specific investments you make. Many mutual funds still charge commissions of as much as 5.75% to buy, but you can eliminate those costs by purchasing no-load funds from reputable firms such as Vanguard.

Also, don’t overlook annual expense ratios when buying investments like exchange-traded funds. The Schwab S&P 500 index fund charges just 0.02% annually, whereas the SPDR S&P 500 index fund charges 0.09%.

5. Bank Fees

  • Monthly Savings: $14.50 ($12 checking plus one $2.50 ATM fee)
  • Annual Savings: $174

Some banks charge $12 or more per month to maintain a checking or savings account unless you meet certain criteria, such as a minimum daily balance. But many online banks offer these accounts for free. If you prefer not to bank online, check out your local credit union, which might offer free accounts and free ATM access.

6. Premium Gas

  • Monthly Savings: $32.25
  • Annual Savings: $387.04

Unless your car specifically requires premium gasoline, you don’t need to buy it. According to AAA, the price difference between premium and regular gasoline averages 59 cents per gallon. With the average American driver paying for roughly 656 gallons of gas per year, sticking with regular gas can result in some real savings.

 

7. High-End Coffee

  • Monthly Savings: $28.50
  • Annual Savings: $342

Face it: Some people need their morning coffee to function normally. But even if that applies to you, coffee doesn’t have to cost a fortune. You don’t even have to cut coffee out of your life completely — just reconsider if the price you’re paying now is worth it. For example, a tall (small) brewed coffee at Starbucks is $1.85, but you can go to the McDonald’s down the block and get a small cup for just $0.90. Assuming you buy a cup every day, that switch will save you $28.50 a month. You might even end up preferring the taste of McDonald’s coffee, making it a win-win.

8. Bottled Water

  • Monthly Savings: $4.28
  • Annual Savings: $51.36

Annual consumption of bottled water in the U.S. reached 42.1 gallons per capita in 2017, which is a lot more expensive than drinking regular tap water. At an average cost of $1.22 per gallon of bottled water vs. Baltimore’s $0.003 per gallon for municipal tap water, for example, you’re paying 400 times more for the bottled variety. Prices for different bottle sizes can be even higher.

9. Cable TV

  • Monthly Savings: $107
  • Annual Savings: $1,284

Cable television has grown from a minor utility into an expensive mishmash of multilevel packages with premium channels and content. In 2018 the average cable bill was $107. Cutting the cord will save you money (so long as you don’t sign up for too many streaming services instead).

10. Streaming Services

  • Monthly Savings: $73.97
  • Annual Savings: $887.64

See, streaming costs do add up. Services like Netflix and Hulu might seem like a dream come true because they’re much cheaper than cable TV packages, but they still cost something.

Netflix Premium charges $15.99 per month, Hulu with Live TV costs $44.99 per month and Amazon Prime Video costs $12.99 per month. If you bundle everything together, you end up paying a lot every year for these seemingly inexpensive services. Can you imagine cutting the cord completely? You’d certainly save a lot.

11. Phone Games

  • Monthly Savings: $7.68
  • Annual Savings: $92.16

Many smartphone users fall into the trap of playing online or app-based games that entice them with in-game purchases, which cost North American players an average of $7.68 per month. It might not seem like much, but it adds up over time.

12. Newspaper Subscriptions

  • Monthly Savings: $15
  • Annual Savings: $180

Nowadays, you can get news from any number of sources — often for free. Major daily newspapers offer in-home delivery and digital editions, but those fees typically range between $4 to $20 per month. A monthly digital-only subscription to the New York Times costs $15. By dropping subscriptions you can save some money over the course of a year.

13. Magazine Subscriptions

  • Monthly Savings: $4.97
  • Annual Savings: $59.70

There’s nothing like the feel and smell of a glossy magazine in your hands. But in this digital age, it’s getting easier to get your news online either free or for a fraction of the price of print magazines. Subscription costs can add up. Statistics on average annual magazine subscription prices are hard to come by; the most up-to-date number is 2011 prices from Statista when the average price of a subscription was $29.85. Let’s assume you subscribe to two magazines. Consider going with the often cheaper digital subscriptions, or take advantage of publications that offer a set number of free articles you can enjoy per month.

14. Satellite Radio

  • Monthly Savings: $15.99
  • Annual Savings: $191.88

Satellite radio lets you listen to more than 100 channels in your car and online. The industry is known for promotional pricing, but the regular cost of a satellite radio subscription can be hefty — $15.99 per month for the Sirius XM Select subscription, for example. With other low-cost or free options like Spotify and Pandora available, you can save cash and still access the music you want.

15. Warehouse Club Memberships

  • Annual Savings: $60

Shopping at warehouse clubs is popular for budget-conscious families. But if you’re young and single, you probably don’t need to buy at a store that encourages customers to purchase in bulk, which can result in food waste. A Costco membership costs $60 a year, and a Sam’s Club membership is $45. Shop during sales at other grocery stores and save on the membership fees.

16. Gym Memberships

  • Monthly Savings: $58
  • Annual Savings: $696

The average gym membership costs $58 per month, but 67 percent of people with gym memberships never use them. If you’re among that percentage — and even if you’re not — dropping your gym membership can add up to big savings.

17. Cigarettes

  • Weekly Savings: $43.96 (one pack per day)
  • Monthly Savings: $188.40
  • Annual Savings: $2,260.80

Smoking rates continue to decline in the U.S., with only 14 percent of American adults smoking, according to the Centers for Disease Control and Prevention. If you still light up regularly, here’s another reason to quit: You’ll save an average of $6.28 per pack.

18. Manicures and Pedicures

  • Monthly Savings: $35
  • Annual Savings: $420

While it’s fun to treat your fingers and toes to a little upgrade every now and then, those services can add up. The average manicure is about $15 a pop, while the average pedicure runs around $20. Doing your nails at home can save you quite a lot of money over the course of a year, even if you only get one mani/pedi a month.

19. Haircuts

  • Bi-monthly Savings: $39.50
  • Annual Savings: $237

According to Square, the payment processor, the average national cost of a men’s haircut is $34 and a women’s haircut is $45. Averaging those together gives a true national average haircut price of $39.50. Let’s say you get your hair cut once a month. If you can stand a little shag let your hair grow longer, get a haircut every two months, and watch your bank account get bigger.

20. Lunch Out

  • Monthly Savings: $200 (for 20 lunches out)
  • Annual Savings: $2,400

Lunch costs range from a few dollars at a fast-food restaurant to $20 at a nice sit-down place. Let’s assume you’re spending $10 total (including tax and tip) on lunch each day. For that much money, you could probably buy the supplies to make a humble lunch for the whole week. If you saved the money you used to spend on eating out for lunch, you could afford a vacation by the end of that year.

21. Takeout Food

  • Monthly Savings: $169.22
  • Annual Savings: $2,030.64

When you order takeout food instead of making it yourself, your wallet can take a big hit. The average American spends almost $170 a month on takeout, based on takeout spending data for 50 large cities collected by the website Vitagene. By making food at home rather than ordering in, you could save a significant chunk of change that could be spent on other necessities.

22. Ridesharing Services

  • Monthly Savings: $46.72
  • Annual Savings: $560.64

The two most popular ridesharing services, Uber and Lyft, charge similar prices for their rides, which average out to about $2 a mile. The average trip is about six miles. The money app Empower looked at monthly ridesharing spending totals of its members. The average across all cities and both services was $46.72 a month. Walking or taking public transportation can pay big dividends.

23. Dry Cleaning

  • Monthly Savings: $15
  • Annual Savings: $180

Dry cleaning services typically charge by the item, so prices vary depending upon which items are brought in for cleaning. Many people reserve this service for hard-to-wash things like suits, slacks and dresses. The cost to dry clean a suit once a month typically runs between $10 and $20, while dresses can run around $12 to $15. Figuring a monthly spend of $15, if you can handle the work yourself, you might save a couple of hundred bucks or more a year.

24. Online Shopping Shipping

  • Monthly Savings: $10
  • Annual Savings: $120

In a recent survey, 15% of respondents said they shop online weekly, and 28% say they purchase online a few times a month. Only 20% said they never shop online. Online shopping is great when shipping is free, but that’s not always the case. Online stores and marketplaces often charge a fee for orders under an order threshold of $50 to $150. At Bloomingdale’s, for example, shipping is free with purchases greater than $150. A purchase total between $50 and $75 incurs a $10 shipping fee. Those fees can really add up.

25. Weddings

  • Annual Savings: $628 (one wedding per year)

Attending a wedding is no small endeavor. In many cases you must arrange travel, buy yourself a new outfit, purchase a wedding gift and possibly find somewhere to stay overnight. Before you know it, you’ve blown your vacation money just to see two people get hitched. Doing all that costs an average of $628 for one wedding. The cost might rise above $1,000 for members of the bridal party.

If you eliminated the prior 25 things from your budget completely, you’d stand to save almost $15,000 every year. Granted, that’s probably impractical. But this exercise does show that the little things add up. Do a spending audit, and then prioritize your expenses. Cut out what doesn’t matter to you so you have more money for the things that do.

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Jordan Rosenfeld contributed to the reporting for this article.

This article originally appeared on GOBankingRates.com: Cutting Out These 25 Expenses Will Save You $14,992.52 a Year