You can't go back. Time travel is simply science fiction, of course, but many people would love to go back in time and capture some of the money they have wasted over the years on stuff they didn't need, products that broke, and services they never used.
Money spent on things that didn't bring real value or happiness to life could bring significant future happiness by being used to allow you to retire a few years earlier or have more money to enjoy retirement.
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When you think about how much of that is wasted, it will take your breath away, or make you seriously depressed for what might have been.
When you think about the amount of money that flows through our hands over the years, it is truly amazing. Today, the average worker will make over $1.5 million during their working career, and higher income employees literally have millions of dollars that flow through their households.
The good news is many employees are investing some of those funds for their future. Sadly, many of those dollars that aren't funneled into automatic savings plans hit the household chequing account never to be seen again. Curbing the waste and capturing the savings is vital. Consider evaluating where you waste money and instead funnel that money into investments to make a significant contribution toward your future personal happiness. Here are some big money wasters we hear about from the employees we work with:
Speeding tickets: The problem with speeding tickets is there is a double whammy. Not only do you have to pay the fine, but if you get a few of them it also raises the cost of your auto insurance. The average fine for a speeding ticket is $150.00 and the average increase in insurance cost is $900 (over a three year period). The money wasted for a serial speeder over 20 years could total $9,000. If that money could be invested at seven per cent instead for retirement in 20 years, it could have grown to $19,700 instead of going to the municipality or your favorite insurance company.
Unused gym memberships: Once March rolls around and the thoughts of resolutions are over, reality hits that you aren't a morning person and you're too busy or too tired to stop by the gym on the way home. The truth is you don't even know where your gym bag is but you still haven't cancelled the membership because you actually really should go. Does this sound familiar? Your gym membership of $39.95 a month doesn't seem so bad except that it adds up to almost $500 per year. If you go, fine. If you don't, you could have invested that money at seven per cent and had $21,000 in 20 years instead.
Buying pet supplies at the pet store: That sweet little face and those cute little eyes from your dog or cat will get you every time, but according to Consumer Reports, when you buy their food and treats at the pet store you end up paying anywhere from 15 to 25 per cent more. They sell dog and cat food as well as treats at discount retailers. Considering this is a recurring expense — it can be a huge money waster. For an average sized dog, you can save $9 per visit, which can save over $200/year just on pet food and treats alone — not to mention the squeaky toy and the little pet stuffed animals. It doesn't seem like much on a day-to-day basis, but over the course of 20 years that could save over $4,000 for retirement. If you are like me and have not one, but five cute little dogs, you can save about $1,000 a year which, of course, adds up to $20,000 over 20 years.
The luxury SUV: It seems like an oxymoron, the "luxury" SUV, and that is because it is. These two words do not go together. A sports utility vehicle by definition is for sports and utility — this is the kind of vehicle that you'd expect to get muddy and dented up a bit because it is going four-wheeling or on the beach. A Lexus GX SUV starts at $53,000, but a Ford Explorer XLT starts at $31,500. Your taxes and license are higher with the luxury SUV as well as your ongoing insurance premiums. If you are really taking your SUV to the mountains or the beach, consider the Ford and take your $21,500 (minimum difference) and invest it at seven per cent so you'll have an extra $83,000 to spend in retirement.
Cable and digital TV: When I was a kid, we didn't have to pay for TV — advertisers paid for TV and we had to watch the commercials. That was how the game worked. Now we pay for TV and we still have to watch (or fast forward) the commercials. Granted, we didn't have great shows like Boardwalk Empire or 24, but we did have some good ones. Today, the average household spends about $75 per month on TV, and that does not include renting movies from Blockbuster or Netflix. We take it for granted that we'll have a "cable bill." If we didn't and could invest the difference, our lack of TV watching would net us about $40,000 over 20 years. That is one expensive hobby we take for granted.
High tech gadgets: Technology makes our lives easier. In fact, I use my iPad instead of a laptop and other than the annoying feature of completing my words, which causes typos and strange configurations, I love it. It is so much easier to carry and I can do everything I need to run my business when I am travelling as well as when I am simply commuting to and from the office. There are, however, hundreds of high tech gadgets that end up being expensive door stops and simply discarded. One of these items is the digital notepad and digital pen — for $180 you can write with the digital pen on a regular yellow pad and it takes your notes and turns them into text in Word when you transfer it to the computer. Except no matter what you do, it won't read your handwriting and you end up spending as much time correcting the notes as you would have simply typing them. Being an early adopter in technology is one thing, but sometimes technology is simply a waste of money. Skipping the high tech gadgets every year could turn into $8,000 in retirement.
Bargain clothes shopping: People who pride themselves on being frugal often are "penny wise, pound foolish" in that they focus on the "bargain" aspect of a purchase rather than the "use" aspect of a purchase. An item is not a bargain even if it is advertised at "50 per cent off" if it is never used. Many people who go shopping just to shop end up with clothes that are rarely (if ever) worn and that money is completely wasted. It's better to analyze your wardrobe first to decide what you need, and then bargain shop for the staples such as khaki pants or dress shirts and splurge only on special items that are either seasonal or are tried-and-true classic items.
Sports equipment: After watching the Tour de France, many people are inspired to jump on their bike for a ride. In the U.S. about 10 per cent of bike riders use them to commute to work while others ride after work for exercise. Many bikes, however, sit in the garage, only to be taken out immediately after the televised bike race that got their owners inspired. A decent entry level bike can cost about $700 and a touring bike much more than that. Those who find this exercise more of a fantasy than a reality can either borrow a bike or buy an inexpensive used one and save that $700 so it can grow to almost $3,000 in retirement.
Rebates: It sounds great when you are at the store. The refrigerator is on sale and has a $150 manufacturer's rebate, so you buy that one instead of the one you were considering. Research shows that up to 60 per cent of mail-in rebates are never collected. I predict the ones that are turned in are cashed in and spent rather than invested back into the household budget. For most people, rebates are a total waste of money and a well thought-out appliance purchase would be a better value than chasing a rebate. If you do use a rebate, send it in and when the cheque comes in, invest it! If you have $150 in rebates a year, that could mean $6,500 to spend in retirement.
Fishing boat: Drive by a storage lot and you'll see boats, RVs, ATVs and all kinds of motorized vehicles that are rarely, if ever used. How many motorcycles are sitting in the garage collecting dust? The thought of taking the boat out on the river every Saturday morning when the sun comes up and throwing your line in is much more of a dream than a reality for many. It would be much more cost effective to rent a boat a few times a year and still enjoy the day while saving the money spent on your own boat (as well as the repairs and upkeep) to put towards retirement, when you actually can use a boat every day. You can pick up a quality used fishing boat with a trailer for $4,800 on EBay, or at your local dealer, or you can save that money in order to have $18,500 more for retirement.
These examples of money wasters come from the many employees we talk with who want to prepare for retirement. Let's add up what these wasted funds are robbing from their retirement if invested at seven per cent for 20 years:
|Unused gym memberships:||$21,000|
|Buying pet supplies at the pet store:||$4,000|
|The luxury SUV:||$83,000|
|Cable and digital TV:||$40,000|
|High tech gadgets:||$8,000|
|Bargain clothes shopping:||$15,000|