What could you do with an extra $5,000 a year? Pay down high-interest credit cards or other debt? Bolster your retirement savings? Take a family vacation?
They all sound good, and if you ask wealth-building guru Dave Ramsey, you might be closer than you think to getting that $5,000. Or, more specifically, to stop wasting it.
In September, Ramsey posted on X: “How to waste $5,000 a year: Spend $13.70 a day on things you don’t need.”
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For far too many, it’s so true. A Starbucks here, an impulse buy there — the little things can really add up. To thousands if you aren’t careful.
The good news is, this is one area that is fairly easy to correct. Here are five actionable tips on how to claw back that $13.70 — or more! — a day.
Stop Saying “It’s Only…”
Ever notice how often the word “only” precedes the price of something? It’s a powerful retailer’s trick, and a word that needs to be eliminated from your buyer’s vocabulary, said Ken Robinson, certified financial planner (CFP) and founder of Practical Financial Planning.
“When we’re getting ready to buy something we haven’t planned for, we’ll tell ourselves, ‘It’s only fifteen dollars,’ as if that’s too small to matter,” he said. But “It’s only” buys can add up.
“Any time you think, ‘It’s only…’, stop and think about it for a moment to be sure you really want to make that purchase,” Robinson said.
Think of your debt, or that vacation, then decide if it’s worth it.
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Assess Your Amazon Purchases
Amazon, and other online stores, make it incredibly easy and convenient to buy items. One click and $13.70 is gone. It can become habit, an expensive one.
But, Erika Kullberg, attorney, personal finance expert and founder of Erika.com, said it can also be helpful.
“The one upside to websites like Amazon, is they keep a handy log of all your past purchases,” she said.
The end of the year is a perfect time to assess your spending. Get the total you spent on Amazon for the year, divide by 365, and see how much you spent, on average, per day.
“Chances are, you won’t love the number you see,” Kullberg said. “Then, go back through your purchases with more focus and pay attention to which items you got a lot of use out of, and which ended up in the junk drawer or being tossed out quickly.”
The finance expert said this is a great way to get perspective and make adjustments for next year.
Monitor Subscriptions
Kullberg said that subscriptions are another area where she sees many consumers blowing more money than they realize, or want to.
In fact, in a 2024 Next Gen Personal Finance survey, the average respondent estimated they spent $83 per month on subscriptions. When they checked, the actual number was $219, 2.5 times higher and equal to $7.20 per day.
So, yeah, this is a good thing to check. Kullberg’s advice?
“Don’t let the free trials trap you,” she advised. “Always set a reminder to cancel them and check in with yourself to see if it is really something you need to subscribe to or something you can easily go without. Committing to giving a company your money month after month is not a decision you should take lightly.”
Cut Down on Eating Out
Yes, groceries are expensive, bagged lunches aren’t sexy and eating out is convenient. But it could be costing you a lot more than you think.
In fact, according to the Bureau of Labor Statistics, Americans spent, on average, $3,933 per consumer unit (this ranges from an individual to a family) in 2023. That translates to nearly $11 per day.
Cut that in half and you are well on your way to that $5,000 year-end bonus.
Stop Paying Credit Card Interest
The average American household in 2024 is carrying $8,674 in credit card debt, according to an analysis of data from the Federal Reserve and U.S. Census Bureau by USA Today in September.
With an average credit card interest rate of 23.37% as of August 2024, according to the Fed, that equals $2,027 per year. In other words, the average household is spending $5.55 per day on making big banks richer.
Obviously, many purchases are necessities or emergencies. But like that Amazon audit, it’s a great time to study your annual credit card purchases for frivolous spending. And for every item, add 23% and then determine if it’s really worth it.
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This article originally appeared on GOBankingRates.com: Dave Ramsey: How You Might Easily Be Wasting $5K a Year
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