All too often we focus on cutting out the little things (like a
daily cappuccino), when we should really focus on our major expenses for the
biggest impact. Here are seven areas we spend or waste the most money—and how
to plug those leaks.
Housing
Where you choose to live will make a huge difference in how much
you’ll pay not just for housing but also the other cost of living items.
Sometimes even moving just a town or a few blocks away can be much less
expensive. If you have the flexibility of moving, Sperling’s Cost of
Living Calculator can
help you evaluate different cities. (And if you're moving to a new country,
check out Expatistan’s Cost of Living Index,
which compares typical costs across 1,560 cities, according to user-entered
data.)
Another option is to get a roommate to share the housing costs
or, if you’re a homeowner, refinance to a better rate.
Utilities take up 7% percent of the total expenses. Even if
you’re renting, you can still save on your energy bill with small but smart
measures like using insulating curtains and using your appliances more
efficiently. You can do an
energy audit yourself
to find the energy leaks in your home, and some utility companies offer free
assessments as well.
Transportation
We all know that
driving to and from work every day is costly, but exactly how much of a toll
does each mile of commuting take on your finances? This … Read…
Transportation is the second biggest expense. Gas and motor oil
account for 4.8%, while vehicle purchases (i.e., car payments) account for
6.5%. Again, if selecting where you move is an option, choose a location as
close your workplace as possible. It could save you not just time, but
potentially as much as $125,000 in ten
years. Even better: convince your boss to let you work from home.
Also, the average household has roughly two cars. Do you really
need the second car? If you can swing it, you can save thousands by getting rid
it.
Food
Finally, food is the last of the three biggest expenses. We’ve
shared tons of tips over the years forhow to save money on groceries, including:
It takes a bit of time to learn to make good, inexpensive food
and shop smarter, but the payoff can be huge.
Eating out is one of
the many pleasures of life and a great convenience when you're too tired or
swamped to cook, but it's also one of the…Read…
The other part of the big food budget is eating out—something
many of us enjoy or do when we’re too tired to cook. Changing your dining out
habits could save the average American hundreds if not thousands a year, and it
doesn’t have to be a big sacrifice either. Besides eating out less, you can save money when dining out by timing when you go out and ordering wisely.
Where We Waste the Most Money
Over the years, I’ve
received many, many emails from readers. A lot of those readers tell me that
they’re in a serious financial bind and that… Read…
Besides looking at the major expenses above, you’ll also want to
make sure you’re not throwing money away or overpaying for anything. With that
in mind, here are the budget items you should pay close attention to, in
addition to other financial blind spots.
Any Kind of Loan
If you don't
understand your credit score and how it's calculated then you're in the dark
regarding one of the most important aspects… Read…
If you can reduce or eliminate the interest on any kind of
debt—whether it’s a car loan, mortgage, or credit cards—do it. Carrying credit
card debt, especially if you only make the minimum payments, is a particularly
terrible move that can cost you thousands in addition to lowering your credit
score. If you’re carrying that kind of debt, make a debt reduction plan to dig yourself out as soon as possible. Also, boosting your credit score can improve your spending power and save tons on big purchases
like a home.
Taxes
If you itemize your tax return, claim every last deduction you
can. Not doing so is just handing that money over to the IRS. See the IRS’s guide to itemized deductions and Kiplinger’s list of themost overlooked tax deductions so you can plan accordingly.
Insurance
Your current auto
insurer (and perhaps other service providers) may be holding out on you. If
you're eligible for a lower rate, you probably…Read…
Life and other personal insurance account for only 0.6% of the
average budget, but getting a lower rate is so easy to do there’s no reason not
to. You can save on car insurance by taking an online driving course. Combine
insurance policies to get a discount. And simply call and comparison shop each year to make sure you’re getting the best rates.
Entertainment
Cable TV is insanely
expensive, and with all the cheap video services out there, it's easy to cut
the cord without losing your favorite shows.… Read…
Finally, the average household spends about $2,700 a year on
entertainment. The first thing people think to do is ditch cable television because the cost is pretty outrageous when there are free or
much less expensive options. There are also tons of ways to have fun without
spending a cent. See The Simple Dollar’s list of
100 such ideas.
Figure Out Where You Can Cut
Back
Conventional wisdom
tells us that everything gets more expensive over time and there's nothing we
can do about it. That's not the case. If… Read…
The list above should help you find more room in your budget,
since they're the seven biggest expenses or money wasters. For even more
savings and advice, check out our guide to saving money on all
your monthly bills.
Of course, your own spending habits might differ from the
average person, so you’ll also want to track your budget (e.g., with Mint) and see where
you money really goes so
you can start saving more of it.
By: MELANIE PINOLA / http://lifehacker.com
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