11 Expenses Successful People Don’t Waste Time or Money On
1. Lottery
Tickets
If you truly want to strike it rich, don't play the
lottery. This is a sure way to burn money fast -- and rich habits simply don't
include a weekly stop at the convenience store lotto line. Your chance of
winning the Powerball grand prize is about one in 292 million. Those odds are
not in your favor. Take a look at the math: A Powerball ticket costs $2. That
might not seem like much, but if you play twice a week for a year -- and buy
two tickets each time -- you'll have flushed more than $400 down the drain.
Don't waste your hard-earned money on chance when you can put it toward
wealth-building goals, such as retirement or college tuition. Invest the same
$416 each year, getting just a 5% return, and over 30 years you'll have
$28,055.
2. Banking Fees
Like many businesses, banks charge fees for their services.
For instance, many banks require monthly maintenance fees for certain accounts.
They also typically charge around $35 per overdraft. That's not even taking
into account monthly maintenance fees, ATM fees and other sundry charges.
3. Interest on Credit Cards
A credit card can be similar to eating from a tub of ice cream: you might feel a little guilty for overindulging afterward, but it's just too convenient. Sure, it's easy to swipe the plastic -- but you won't catch wealthy people accruing high credit card interest. They know it's a waste of money. To avoid accruing interest, only buy what you know you can pay for when your statement comes. If you are carrying a balance, transfer or consolidate your debt to a credit card with a zero percent introductory APR. Just be sure to pay off your balance before the promotional period ends.
4. Inflated Interest Rates
Americans' average FICO score hit 716 in 2022, its highest
mark since Fair Isaac Corporation, which created the credit risk scoring
system, started tracking statistics, according to data collected by Experian.
That's a money-saving milestone since a clean credit record gives conscientious
consumers more than
Credit scores play a leading role in determining your
interest rate for auto loans, mortgages and more. Just by having a higher
credit score, you can save hundreds or thousands of dollars in interest over
the life of a loan. People with substandard scores, however, might not be able
to land loans at all.
Financially
successful people keep their credit reports pristine by paying bills on time,
keeping debt levels low and fixing mistakes on their credit reports. And if you
already have a decent credit history but carry a balance on some credit card
accounts, consider calling card issuers to request a higher credit limit. A
higher limit will reduce your credit utilization rate -- the percentage of
available credit you are using -- and could boost your score. While you're on
the phone, it can't hurt to ask for a rate reduction. The lower your interest
rate, the faster you can blast balances.
5. Late Fees
Successful
people don't get saddled with late fees that can chip away at their bank
balances and credit scores. Paying late can even cost people who pay off their
balances every month. Just about every other monthly bill carries its own
procrastination penalty as well. Savvy spenders avoid late fees by automating
everything. If you've ever asked yourself, "How can I get rich?" --
automating your payments so you don't get hit with high fees and penalty rates
can help you hold on to more of your money.
6. Extended Warranties
Somewhere along the line -- say, if you bought a new 4K TV
-- you were probably asked, "Would you like to purchase an extended
warranty?" But according to Consumer Reports, a financially successful
person has a simple answer to that question: "no."
Although people want the most value from purchased products,
generally, extended warranties don't give you more bang for your buck. In fact,
according to Consumer Reports, retailers keep 50% or more of what they charge
for extended warranties. Extended warranties just aren't one of the things rich
people buy. So, what do rich people do? They research -- and you should follow
their lead. For instance, check your manufacturer's warranty before saying yes
to an extended warranty. You might have more coverage than you initially
thought. Also, compare the cost of potential repairs versus the extended
warranty. You'd typically be better off putting aside the money you'd spend on
a souped-up warranty to cover future repairs yourself, according to Consumer
Reports. So the next time a salesperson tries to sell you on that extended
warranty, shut the conversation down fast.
7. Impulse Buys
Have
you gone into a store intending to purchase one thing but come out with a cart
full of stuff? Maybe it was buy one, get one free at the grocery store, so you
snagged a few extra items. Or perhaps it was a flash sale on your favorite
clothing website and you bought designer shoes. Whatever the case might be,
this isn't a shopping practice for the wealthy. Successful people are planners,
and impulse purchases tend not to mesh with this quality.
8. Low-Interest Savings Accounts
Do you like stashing cash in savings because it's secure
and you can pull out money on a whim? Would you like to see more than pennies
on your interest? If you answered "yes" to both, change your strategy
to truly emulate a financial mogul. Regular savings accounts don't earn a lot
of interest. You can find high-yield savings accounts by looking beyond
traditional brick-and-mortar banks. Online banks, for example, frequently offer
the highest return rates because they have no or lower overhead costs. If
you're looking to boost your wealth by making wise decisions with money,
explore your online savings account options.
Furthermore, automating works as a smart savings strategy. David Bach, the author of "The Automatic Millionaire," suggested diverting dollars directly to your high-interest savings account before you even see it. That way, you won't have the opportunity to second-guess or sabotage your savings plan.
9. High-End Brands
You
might see a lot of designer labels on the red carpet, but many rich people
don't choose designer labels for every purchase. Though they have the funds to
splurge at luxury retailers, they understand that doesn't always mean they
should. What do rich people buy? The answer can depend on the day. For example,
former first lady Michelle Obama donned her share of designer duds. But she was
also seen boarding Air Force One and making press appearances while wearing
dresses from Target during her husband's presidential tenure. So, if you want
to emulate the habits of rich people, stop and ask yourself if that $200 pair
of designer jeans is really worth the investment -- or will $30 discount store
denim do the trick? Always shop wisely, and keep your budget and financial
goals in mind.
10. Bad Real Estate
Billionaire investor Warren Buffett still lives in the
Omaha, Nebraska, house he bought for $31,500 in 1958. He shelled out
significantly more for his vacation getaway in Laguna Beach, California,
purchasing the 3,588-square-foot home for $150,000 in 1971. He put that
property on the market for $11 million in 2017 and ultimately sold it the next
year for $7.47 million -- well below the asking price, but still a hefty return
on investment. Author and entrepreneur Tony Robbins advised millennials to look
at property as an income engine rather than as a place to put down roots. The
truth is few homeowners will be as lucky as Warren Buffett or hang on to homes
for as long, and there's no guarantee a home's value will appreciate at all.
11. Extravagant Inheritances
Financially successful families are often in a position to
give the younger generation a helping hand when it comes to expenses like
tuition and housing. But, for the most part, supporting their kids for life is
just not one of the things rich people do. Many millionaires -- and
billionaires -- have publicly announced plans to leave a big bundle to
charitable causes rather than keeping it all in the family. For example, Bill
Gates has said he plans to donate the bulk of his billions to the Bill and
Melinda Gates Foundation rather than leaving it to his three children. And
Facebook founder Mark Zuckerberg and his wife Priscilla Chan, who have two
daughters, have pledged to donate 99% of their Facebook shares to charitable
causes during their lifetimes.
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