If you are an adult living in the United States, you probably spend about $1,497 a month on nonessential items, which is the average according to research done by Ladder and OnePoll. That means every American adult is spending almost $18,000 a year on things we might not even need. Imagine what you could do with $18,000!
Here, we discuss some of the most common ways Americans overspend on little luxuries. While these items seem innocent enough, they add up, so we provide some much-needed guidance on how to replace them with practical (and cheaper!) alternatives.
Costly Little Luxuries and Cheaper Alternatives
Once you realize what little luxuries and extras you spend your money on, you can begin to cut back without giving up everything that brings you joy in life. Track where your money goes for a month and see if any is consistently going toward luxuries like those mentioned below. If so, you know where, and how, you can start to cut back.
1. Starbucks and Other Take-Out Coffee
Like many Americans, do you rely on a daily Starbucks habit to get you through your workday? According to one study, in 2017, more than one in three Americans spent more on coffee than they invested. That is because about one in four adults spends $11 per week (or more!) on coffee. For many, this daily coffee habit is likely more of a habit than a truly enjoyable splurge.
You can either scale back to take-out coffee just one or two times a week, or you can take a page from billionaire investor and Shark Tank shark Kevin O’Leary’s book. Despite his immense wealth, O’Leary famously claims to never buy take-out coffee, opting instead to make coffee at home, which he claims costs him eighteen cents to make. What does he do with the rest of the money he does not spend on coffee? He invests it.
What could you do with the rest of your money? You could do the same, or use it to pay off your credit card debt, loans, or build up your savings.
2. Dining Out and Take-Out
Whether it is a daily lunch at work, nightly take-out, or a couple of restaurant meals every weekend, eating out quickly adds up.
This is one of the easiest luxuries to know how to cut back on, but one of the hardest to follow-through with as it involves some more work. If you are no longer eating out, you still have to get your food from somewhere. Usually, that means you must cook more.
Luckily, this is not as daunting as it sounds. Get yourself in the habit of cooking by starting slowly. Instead of eating out for lunch five days a week, why not prepare a meal on Sunday that you can take as leftovers for Monday’s lunch? Cutting back even just one day will begin to add up, in a good way.
3. Convenience Purchases on Amazon
Amazon is an amazing site to find great deals on everything from electronics to furniture to clothes to almost anything you can imagine – which is part of the problem. With automatic check-out and free shipping on so many items, it is very easy to get in the habit of purchasing everything you need from Amazon.
Unfortunately, not everything on Amazon is a great deal. Many items, such as household goods like toilet paper or cleaning supplies, are much cheaper in-store than they are online. With Amazon, you pay for the luxury of having the item magically appear at your door without having to venture to the store. While this is great to use in a pinch, if you are in the habit of buying everything on Amazon, you could be overspending. Instead, get back on the habit by purchasing what you can in-store, or at least price-checking before hitting “purchase” on Amazon.
4. Gym Memberships and Classes
Ahhh, gym memberships. If only we could get our money back from all of those unused gym memberships and never-attended exercise classes. While we cannot do that, we can cut back on some exercise-related luxuries.
Of course, running outside and working out at home with just your body weight and no equipment is all that is needed to work-out. But some people like the gym. For those people, instead of cutting back entirely on a gym membership or exercise classes, why not try a less-fancy gym? There are plenty of no-frills private gyms that have just as great equipment as the super fancy ones, at a fraction of the cost. You can get just as great a workout in many different ways, so consider whether the amount you spend on your gym membership is truly worth it or if it is a little luxury you can eliminate.
5. Name-Brand Products
Whether it is clothes, accessories, or food, it is easy to get caught up in the allure of name-brand products. Advertisements have a way of tricking us into believing that only name-brand items are quality ones, but store-brand or generic alternatives can work just as well and taste just as good (if not better, in some cases). Sometimes store-brand items are even manufactured by the same companies that make name-brand products, so you are getting the same product for a fraction of the price.
When it comes to clothes, a pretty logo does not usually change the quality of the clothes, so instead of opting for something with recognition, go with a quality piece without a famous brand.
By cutting back on the luxury of name-brand products, you will cut back on your spending but will not have to give up anything in return.
Cutting Back on Little Luxuries does not mean Cutting Back on Everything You Enjoy!
Nobody needs to cut out every luxury in his or her life. Without some little luxuries, life is simply not as enjoyable! But if you are thoughtful and mindful about your spending, you will probably find that there are places you can cut back on without sacrificing much. After all, if this approach works for billionaire investors, it can work for us too, right?
