What Americans Are Overspending On?
The problem? Overspending can feel good. And it can be hard to resist the immediate gratification that comes with spending money.
Overspending is easy. There are many other smaller items on which Americans tend to overspend — daily buys that many of us think little about.
Typically, the big budget busters that face Americans are houses and cars. The National Association of Realtors reported that the median price of existing homes for sale in September was $245,100. That is an increase of 4.2% from the $235,200 median price in September of last year.
Fortunately, there are strategies to control your spending, the most important being to create a household budget showing how much you spend each month, including smaller discretionary items like eating out and entertainment, as well as how much you bring in. June of this year, the average price that Americans paid for a new car was $34,968, up 3.3% from the same month in 2018.
It also helps to understand what American consumers typically spend too much on. If you know what items tempt us to spend our dollars too freely, you’ll be better able to resist the temptation to blow your money on the little things.
The little things
It’s the little purchases we overspend on every day that really add up. the $6.50 coffee we buy on our way to work, the $20 lunches we eat to get a break from our cubicle or the $200 cable and Internet bill we gladly pay each month.
There are plenty of small items we overspend on each day that aren’t really necessary. Consider that daily lunch — think of how much you could save if you brought your lunch from home. Or those morning coffees, too. You could save a significant amount of cash if you simply made your coffee at home before leaving for the day.
How about Fido or Princess?
The American Pet Products Association estimated that pet owners spent $62.75 billion on their pets in 2019.
The value of your pet is the role that he or she plays in your family’s happiness, and you don’t need to spend recklessly on that. Your cat doesn’t care about brand-name toys, and your dog doesn’t care that your neighbor’s dog has a newer collar.
Toys and gadgets
Americans still overspend on the latest electronic toys, everything from the newest-release smartphones to the highest-end computers and tablets, even when they say they don’t have enough money to contribute to a 401(k) plan or other retirement account.
One way to reduce your taxable income is by contributing to the 401(k) plan if one is available at work. Clients tell me they don’t have any money. Yet, they have the latest iPhone, android, an array of every other new product.
Food
Food is another big dollar-drainer for Americans. The Bureau of Labor Statistics says that consumers spent an average of $7,203 on food i n 2018. That comes out to an average of $4,049 for food prepared at home and $3,154 for food away from home, at places like restaurants and coffee shops.
That figure is up from the average of $5,978 that American consumers spent on food in 2017.
You often have enough ingredients at home to make meals for the week, but aren’t aware that you have everything you need in your cupboards. I know everyone needs groceries, but it’s easy to overspend on groceries when you might not even have to go to the store at all
Banks recommend that consumers, before they head to the grocery store, go online to recipe sites to search for the ingredients they already have in their homes. They might be surprised to find how many meals they can make with food they already own.
Vacations
Almost one in five Americans admitted to regretting going into debt to take an expensive vacation. It’s so easy for our normal financial responsibility to go out the window when we start planning and booking our vacations. It’s an opportunity to treat yourself, but it’s an easy overspending trap to fall into.
Shop around for everything from airfare and hotels to tickets and attractions. Consumers can also stick to public transportation instead of taxi or Uber rides to save money while vacationing. Doing thorough research will pay off in the long run.
