Fix These Top 10 Areas of Wasteful Spending to Reduce Debt and Build Wealth
When it comes to money, it seems we’re all wasteful. According to a recent Hloom poll, more than 8 out 10 Americans admit to squandering money. At the top of the list of wasteful spending is eating out, with 68.9% of survey participants admitting to spending too much money on meals away from home.
The US Department of Labor estimates the average US family spends nearly $3000 a year dining out. For the first time ever, the amount of money spent on meals outside the home has surpassed the amount of money we spend at home. Unfortunately, because restaurants mark-up their food by 200% to 300%, most American families waste between $1500 to $2000 a year eating away from home.
Those who truly understand the path to financial freedom, however, understand that it begins with the willingness to do what others won’t.
But why exactly is eliminating waste like this so important? As you know, my favorite formula for building wealth is:
Income – Expenses = Capital (seed money) left over to invest in wealth building assets.
Now, if you have significant debt, especially high interest debt (ie. credit cards), the formula should be modified to focus on paying off your debt before working on wealth creation:
Income – Expenses = Money left over to pay down debt
Either way, cutting out waste reduces the expenses side of the equation leaving more money for debt reduction or wealth creation.
Now, the fact that we waste money should come as no surprise. What is shocking is that the Hloom survey uncovered areas of wasteful spending that we admit to, but simply do not want to address.
Top Ten Wasteful Areas
1. Uneaten or expired food
2. Grocery items
3. Hobbies and activities
4. Entertainment expenses
5. Streaming services
6. Cable or digital TV
7. Cell phone services
8. Tech gadgets
9. Cars and gas
10. Bottled water
A family of four throws away between $1350 to $2275 worth of food each and every year? Simply by menu planning, monitoring your trash, using the FIFO system, and creatively using left-overs, you can instantly put more money in your pocket.
Likewise, becoming a better grocery shopper reaps huge dividends. Consider becoming a grocery store surfer, plan your meals around store sales, cut out impulse purchases and use coupons efficiently. In this way you can cut your grocery bills by as much as 30 to 40%.
Unfortunately, as the Hloom survey highlights, few people are willing to do this. Financial freedom may just not be that important to them.
Those who truly understand the path to financial freedom, however, understand that it begins with the willingness to do what others won’t. Jerry Rice once stated, “Today, I will do what others won’t so tomorrow I can do what others can’t.” By addressing your wasteful spending today, you’ll put yourself in a position to pay off debt and collect true wealth building assets in the future.
BMWK, are you willing to do what it takes to achieve financial freedom?
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