20 Financial Mistakes: How Americans Throw Money Down the drain

Big or small, some financial habits can ruin a sound financial plan and leave people with empty wallets. To avoid such financial problems edition GoBankingRates has collected the top 20 of the most unnecessary and costly habits.

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1. Shopping in phone apps

In the list of things that you can spend money on, applications for smartphones occupy a large place. These purchases for 1,99 dollars seem quite inexpensive, but they can accumulate, especially if you have children who increase the total purchase price or frequency.

Think about free apps or limit yourself and your family to a monthly budget you can spend on apps.

2. Do not check credit rating

People with a top-level credit rating are entitled to the lowest interest rates when buying a car or home. For a 30-year term, a quarter of a percentage point can amount to thousands of dollars.

Check your credit history regularly and fix any problems as soon as they arise.

3. Have dinner with wine

Buying a dinner with wine is an expensive proposition in restaurants. Restaurateurs usually sell a bottle of wine for about three times the price, and sometimes more. Look for restaurants that allow you to bring your own wine, or avoid wine altogether during dinner.

4. Car rent

In a report on comparing the cost of cars for 2017 year, conducted by the site on the cost of cars, it was found that the total cost of renting a compact SUV could be almost 10 000 dollars more than the cost of buying a similar car.

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Refuse to rent and invest the difference, and you can improve your overall financial condition.

5. Ignoring the 401K pension savings system

According to the 2017 report of the financial advisors investment advisory firm, every fourth employee does not save enough to get the full 401K package. This means that the average employee leaves 1336 dollars each year in the account of his employer. It’s the same as telling the boss that you don’t want a salary increase this year.

It is recommended to maximize contributions to 401K.

6. Dine in the cafe

A survey conducted by Visa in the 2015 year showed that the average American spends about 20 dollars a week for lunch. For a year it's up to $ 1043. There is no need to spend money on meals when you can cook in advance and take with you to work.

7. Using store credit cards

Retail stores are famous for offering a discount on the initial purchase if you are issuing a store card. Although, when you stand at the checkout, this discount in 10 or 20 percent may seem pleasant, but registration is far from a good idea.

Most stores charge a lot of interest on credit, so saving 10-20 percent is less than paying interest on a loan.

8. Card overrun (Overdraft)

Are you spending money on overdraft fees? America's three largest banks—JPMorgan Chase, Bank of America and Wells Fargo—earned more than $6,4 billion in overdraft fees alone in 2016.

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Stop stuffing the pockets of bank presidents and set up overdraft protection. Or control your bills to make sure you don’t spend more than what is on the card.

9. Gym Membership Maintenance

Your unused gym membership—even one you've managed to save on—isn't much of a benefit if you don't actually use it. According to NPR Planet Money, attracting members who won't actually show up for a workout is a strategic move for many gym owners.

For example, most Planet Fitness gyms can accommodate about 300 people, but on average there are 6000 participants. The reason this business model works is because only a small proportion of members use membership on more than a semi-regular basis.

If you are not going to play sports, do not register, so as not to pay for the gym.

10. Reception of checks

Banks often charge a check if there is not enough money in the account, and the person who is trying to cash or deposit the check pays for it.

Make sure that anyone who writes you a check has enough funds in the account from which he receives, or do not accept checks.

11. Do not use health insurance

“Young people, especially men, often think they are invincible and don’t need health insurance,” said Stephen Fox, a financial planner with Next Gen Financial Planning. “However, unexpected tragedies, such as a car accident or serious sports injuries, can lead to significant financial problems on top of others.”

Regardless of age, lack of health insurance can be costly. You will not only have to pay out of your pocket, if you still need medical attention, the lack of insurance may still entail payment of a fine.

12. Refusal to surrender

For people who still use cash, daily change can gradually turn into a tidy amount. Do not neglect your money. Instead, save them and periodically bring them to your bank for depositing to your account. You will be surprised at how much you save over time.

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13. Keep a joint budget with your partner

Couples who do not control each other for expenses risk ruining their budget. Specialists recommend creating a joint budget and allocating money to everyone for personal expenses.

14. Cigarette smoking

According to the Centers for Disease Control and Prevention, up to 36,5 million Americans still smoke cigarettes. A pack of cigarettes costs from 5 to 13 dollars, depending on where you live. Half a pack a day, that's about 200 000 to 600 000 dollars for 40 years.

Leave this habit and save your money and your health.

15. Premium Car Loan Subscription

Getting a car loan approval of $ 20 000 dollars does not mean that your car budget is 20 000 dollars. This money must be returned. Costs should be determined by a well-designed budget, not the size of the line of credit.

16. Avoid dubious stocks in stores

Very often, stores offer promotions using the Bait-and-switch system - a system in which customers are “lured” into the store with a cheap product, but in fact it turns out that the promotional product is out of stock, then the buyer is offered to buy a similar, but more expensive product as a replacement promotional, in most cases this marketing ploy works and people buy what they don’t need.

17. Do not plan your budget

It's easy to spend extra money if you don't have a plan for each of your dollars. Of course, budgeting can be boring, but it can also lead to early retirement if implemented correctly.

18. Impulse purchases

Adding a pack of gum to your cart at the grocery store checkout may not seem like a big deal, but regular impulse shopping is the way to go. For example, online retailers have added new tricks to entice you to return to your abandoned digital cart, such as by sending you email reminders and promotional offers, and to make shopping easier, such as offering in-store pickup. These unplanned expenses can easily ruin a well-planned budget if left unchecked.

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19. Credit Card Debt Transfer

Double-digit credit card interest rates are the norm, which means that people who have a loan get a serious blow to their budget. By making the minimum proposed payments, you will continue to pay this high interest rate for many years. You need to pay off your debt as soon as possible. Once this is done, direct this money to another place of savings or investment.

20. Allocate money to yourself last

First, you need to set aside money to pay for everything you need, then for investment or savings, and only then allocate it for personal expenses. So you will spend less, knowing that you have a limited budget.

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