A common misconception about the super rich: They are heavy spenders because they have the means. Surprisingly, a majority of affluent households are quite frugal. One of the characteristics of the wealthy is the tremendous amount of discipline they have with their money.
If you aspire to join the millionaires’ club, perhaps it’s time to tighten up your wallet and cut out wasteful spending. Here’s a look at five items to eliminate from your daily spending.
1. The latest technology
The temptation to have the latest and greatest technologies is everywhere you turn, so it’s not surprising that many consumers upgrade long before their existing electronics stop working.
How can you avoid electronics spending overload? Think about how much time you’ll save not waiting in line on the days when new products are released. Also, keep your existing devices updated with the latest software, patches, virus protection, and new features to help extend their lifespans for minimal cost. Lastly, when you have your current gadget fixed, try to resist the upsell pitch for a new gizmo.
If it is finally time for a technology upgrade, don’t assume your only option is a hot brand. Even if you’re an Apple fan, Chromebooks and PCs are cheap enough to inspire a change of heart. The Chromebook costs about an eighth of what a MacBook does, starting at $149, compared to $1,299. With increasing platforms and programs offered in the cloud, a simple device like Chromebook could be all you really need at close to a 90 percent savings.
The allure of buying new products can wear off quicker than you think and sometimes just testing out a new device is enough to satisfy purchase cravings and doesn’t cost a dime.
2. Premium brand names
What’s the difference between generic and brand names? Generally, not much. Yet, clever marketing, advertising, and packaging contribute to convince consumers that brand name products are worth the premium price. Smart shoppers take the time to compare ingredients and may find they can save money by going generic.
Ask yourself how much you really want to pay up for luxury brands when you may get adequate functionality out of no-name products for less.
3. Overpriced bling
Glamorous jewels for special occasions may come with gigantic price tags. If you have expensive taste or just want to wear something dazzling for a festive event, you might want to consider renting or borrowing them.
There are a growing number of trendy businesses such as Rocksbox, Haute Vault, and Adorn that make it easy to rent designer jewelry for reasonable membership fees. Don’t want to commit to a membership program? Borrow pieces from friends and family for special occasions or polish up your existing jewels and get them sparkling like new.
If you’re in the market for a lifetime piece like an engagement ring, however, there are still ways to purchase a beautiful piece without the markup of a luxury name like Tiffany’s. You might be surprised to know that Costco sells contemporary rings, including high clarity diamonds. While you won’t get Tiffany’s attentiveness and services at a place like Costco, the diamonds still sparkle.
If you’re curious how the pricing can differ, Good Morning America did a study that compared two similar rings at each of the two stores and found that Tiffany’s ring priced at $16,600 was actually worth only $10,500. But the Costco ring priced at $6,600 was actually appraised at $8,000.
4. Excessive couponing
Spending more to save more typically doesn’t benefit your wallet. Marketers are masters at convincing consumers they need more, when the deals actually involve more money out of your pocket.
The problem with promotions like buy three to get one free is that shoppers can end up with unnecessary excess. Before reaching for a bunch of coupons and rushing to the store before they expire, take a step back and figure out how much you’ll actually be saving.
Extreme couponing can consume a lot of time and become wasteful. Save yourself a lot of hassle and avoid ending up with a house full of clutter by not trying to grab every single deal you come across.
5. Unlucky lottery tickets
How many times have you daydreamed about picking a winning lottery ticket? Let’s face it; the odds are simply stacked against you.
With frequent and well-targeted sweepstakes advertising, Powerball numbers may cause you to falsely believe it may be your lucky day to win the lottery. Statistically the odds of winning are much more difficult than you think.
In fact, the lottery is frequently referred to as a tax on the poor. Studies have shown that a large majority of Lotto players are uneducated, from low-income families. Lotteries are actually a form of tax revenue for state governments, only they are a much larger rate of taxation than what low-income families would pay on income taxes, ranging from 30 to 40 percent.
Where you purchase lottery tickets also affects how much you could owe in taxes on any winnings. If you buy a winning ticket New York, you could end up paying a significant portion of your winnings to city and state taxes even if you don’t reside there.
How Much More Money Could You Have?
Consider how much money you could have in 10 to 40 years if you stopped wasteful spending now and invested that money instead.
While it’s easy to assume that cutting out expensive purchases like diamond jewelry can make quite an impact on your ability to save, it’s often the smaller, repeat purchases that can add up to bigger savings.
There are many ways to start eliminating wasteful spending today so you can have more money for tomorrow. Rather than getting a rush from spending on things you don’t really need, focus on the excitement of how much you can achieve by investing that money instead.