20 Things People Waste the Most Money On

Published on April 26, 2024 at 4:00 pm by Talha Qureshi in Business, Industries, Lists, News

In this article, we will look at the 20 things people waste the most money on. If you want to skip our detailed analysis, you can go directly to the 5 Things People Waste the Most Money On.

Money Wasting Trends and Statistics

While people raise concerns about inflation and their ability to save, they overlook the amount of money wasted that could have been invested or saved. According to a report by the Federal Reserve Board, the overall financial well-being of an average adult in the US declined by 5% from 2021 to 2022. As per the survey, 73% of the adults reported being at least okay financially in 2022. Moreover, 35% of adults reported being financially worse off than the previous year.

Some of the prominent things people waste the most money on in the US include food, dining out, alcohol, and impulse buying. One of our recent articles on the 20 Countries That Waste the Most Food discussed how the United States of America is one of the top countries to waste the most food, wasting approximately 19.3 million tons per year. According to a survey conducted by Cherry Digital, a communications agency, American households waste an average of $907 annually. Looking at a state-wise analysis, even the least wasteful state, West Virginia, was recorded to waste food worth $405 per household annually. Moreover, according to the survey, households in South Carolina were wasting approximately $1,305 worth of food each year. In addition to the money wasted on food, Americans spend extensively on dining out. The Economic Research Service of the US Department of Agriculture found that for a typical dollar spent on food in the US, 34.1% accounted for restaurants and dining-out services in 2022. Moreover, 12.4% of the remainder of the food dollar went to retail trade.

Alcohol consumption rates are high in the US. According to the National Institute on Alcohol Abuse and Alcoholism (NIAA), approximately 172.7 million adults aged 18 or above reported drinking during 2021. This amounted to approximately 67.4% of people in the age group. While drinking has adverse effects on health, it is not pocket-friendly either. The American Addiction Center, while addressing the cost of alcohol, found that even the drinking habit of 1 glass a day costs, on average, $1,456 per year, whereas consuming a bottle a day can cost up to $607 a month and $7,280 a year. In addition to the first-hand cost of drinking, there are various hidden costs associated with the habit. For instance, The Centers for Disease Control and Prevention found that the US economy lost approximately $179 billion due to an alcohol-related decrease in productivity in 2019. To read more about alcohol consumption rates within the US, you can look at the 20 States that Consume the Most Alcohol per Capita.

Advice from Successful Entrepreneurs and the Rise of Retail Investing

Warren Buffett, the Oracle of Omaha, is among the most successful investors of all time. He is the chairperson of Berkshire Hathaway Inc. (NYSE:BRK-A). One of Buffett’s best quotes about business, investing, and life is “Do not save what is left after spending but spend what is left after saving”.

While saving money is a good approach to managing money, putting money to work is an even better approach. One of the ways you can use your money positively is to invest in stocks, bonds, assets, mutual funds, cryptocurrencies, and exchange-traded funds (ETFs). Robert Kiyosaki, a famous American Businessman and author renowned for his book Rich Dad Poor Dad says, “The philosophy of the rich and the poor is this: the rich invest their money and spend what is left. The poor spend their money and invest what is left”.

Retail investing is on the rise in the US. According to a report by JPMorgan Chase & Co (NYSE:JPM), the percentage of households with investments in stocks increased to 58% in 2022 from 49% in 2013. Moreover, lower-income individuals were 4 times more likely to transfer funds to their investment accounts in 2023 as compared to 2015. Moreover, another report by S&P Global Inc. (NYSE:SPGI) found that retail ownership across all market caps grew by 5.6% between 2020 and 2022. Small-cap companies witnessed the greatest increase of 7.1%, and from a sector perspective, stakes in energy companies increased over 7.2% during the same period.

One of the top companies that have influenced the rise of retail investors is Robinhood Markets Inc. (NASDAQ:HOOD), a financial services company that pioneered commission-free trading and increased the accessibility of financial markets for retail investors. On March 13, Robinhood Markets Inc. (NASDAQ:HOOD) reported its operating statistics. The platform had 23.6 million funded customers towards the end of February, up by approximately 130,000 from January. Moreover, the trading volumes of Robinhood Markets Inc. (NASDAQ:HOOD) were high across all asset classes compared to January 2024. The Equity Notional Trading Volumes for February were $80.9 billion, whereas the Contracts Traded and the Crypto Notional Trading Volumes were recorded to be 119.1 million and $6.5 billion, respectively.

Top Stocks for Beginner Investors

If you are new to investing, blue chip stocks such as Apple Inc. (NASDAQ:AAPL) and The Procter & Gamble Company (NYSE:PG) can be good starting points. These are beginner-friendly stocks with low risk, high stability, and a track record of profitability. To read more about the best stocks for beginners, you can look at 10 Best Stocks for Beginners with Little Money According to Reddit.

Apple Inc. (NASDAQ:AAPL) is a top blue chip stock with a decade-long growth and profitability track record. The stock is also a top pick among analysts and hedge funds. Based on 3-month price targets from 30 Wall Street analysts, Apple Inc.’s (NASDAQ:AAPL) average price forecast of $200.71 represents an upside of nearly 18% from current levels. The stock has received 17 Buy ratings and 11 Hold ratings from investors. Here are some comments from Apple Inc’s (NASDAQ:AAPL) Q1 2024 earnings call:

“Products gross margin was 39.4%, up 280 basis points sequentially, also driven by leverage and mix, partially offset by foreign exchange. Services gross margin was 72.8%, up 190 basis points from last quarter, due to a more favorable mix. Operating expenses of $14.5 billion were at the midpoint of the guidance range we provided and up 1% year-over-year. Net income was $33.9 billion, up $3.9 billion from last year. Diluted EPS was $2.18, up 16% versus last year and an all-time record. And operating cash flow was very strong at $39.9 billion. Let me now provide more detail for each of our revenue categories. iPhone revenue was $69.7 billion, up 6% year-over-year. We set all-time records in several countries and regions, including Latin America, Western Europe, the Middle East, and Korea, as well as December quarter records in India and Indonesia.”

The Procter & Gamble Company (NYSE:PG) is another blue-chip stock with a proven growth and profitability track record. The company manufactures and markets consumer products. On April 19, The Procter & Gamble Company (NYSE:PG) reported earnings for the fiscal third quarter of 2024. The company reported earnings per share of $1.52, ahead of market expectations by $0.11. The company’s revenue for the quarter amounted to $20.20 billion. Here are some comments from The Procter & Gamble Company’s (NYSE:PG) Q3 2024 earnings call:

“We expect these headwinds to moderate or annualize over the coming periods. Moving to the bottom line, core earnings per share were $1.52 up 11% versus prior year. On a currency neutral basis, core EPS increased 18%. Core gross margin increased 310 basis points and operating margin increased 90 basis points. Strong productivity improvement of 320 basis points enabled continued strong investment in superior products, packaging and consumer communication to drive market growth. Currency neutral core operating margin increased 220 basis points. Adjusted free cash flow productivity was 87%. We returned $3.3 billion of cash to share owners, approximately $2.3 billion in dividends and $1 billion in share repurchase. Over 3 quarters, more than $10 billion returned to shareowners in dividends and repurchases.”

With this context, let’s take a look at the 20 things people waste the most money on.

Photo by Karolina Grabowska: https://www.pexels.com/photo/hands-holding-us-dollar-bills-4968630/

Our Methodology

We relied on a consensus methodology to compile the list of 20 things people waste the most money on. We sifted through more than 10 sources on the internet to get the most frequently mentioned things people waste the most money on. The list is ranked in no definitive order, however, we have included relevant statistics for the items.

20 Things People Waste the Most Money on

20. Impulse Buying

Impulse buying is among the leading things people waste the most money on. According to a survey conducted by Retail Network Insights, approximately 94% of their American respondents admitted to spending impulsively. Moreover, according to a 2022 report by CNBC, Americans spend approximately $314 a month on Impulse buying.

19. Unused Memberships and Subscriptions

Unused Memberships and Subscriptions act like a drain in your bank account. According to a CNBC report published in 2022, one-third of the subscription consumers spend approximately $100 to $199 monthly. Moreover, almost 42% of these users continue to pay for these subscriptions even when not using the service.

18. Bank Fees

Many strings are attached to bank accounts, which can lead to a waste of money. Some types of bank fees that people pay include monthly maintenance, ATM, overdraft, wire transfer, and excessive transfer fees. These charges can be minimized by cautiously using your account, not exceeding the limit, and having all your accounts in a single bank.

17. Late Fees

Late fees can cost you a huge amount and can be avoided by being cautious. According to a report by CNBC, US households spend approximately $3 trillion annually on recurring bills, and overdue charges and late fees add up to an additional $74 billion per year. Moreover, an average American household spends $577 per year on extra costs related to late bills or fee payments.

16. Credit Card Interest

Credit card interest is also one of the things people waste the most money on. According to a report by NerdWallet, credit card households spent an average of $1,155 in 2023. The interest paid by self-employed people was even higher, recorded at $1,539 during the same year.

15. Extended Warranties

Extended warranties are like insurance for your appliances, which will be faulty in a certain period. While having insurance for your health, precious items, and property is helpful, paying extra dollars to get only pennies back makes extended warranties one of the 20 things people waste the most money on.

14. New Cars

Buying a new car is one of the 20 things people waste the most money on. Despite being very expensive, a new car loses significant value within the first few years of ownership. You can avoid the waste of money by buying used cars that are in good condition.

13. Premium Gas

Most people waste money on buying premium gas when they can use regular-grade gasoline. According to a report by CNBC, Americans collectively waste $2 billion a year buying premium gasoline. The amount of money wasted can be avoided by understanding the octane rating required for your car.

12. Bottled Water

Plastic water bottles are harmful to the environment and one of the 20 things people waste the most money on. You can save money by transitioning to tap water and saving your precious dollars.

11. Dining Out

Dining out in fancy restaurants and ordering restaurant food is one of the things people waste the most money on. According to a report by the New York Post, an average American spends over $2,500 a year on dining out.

10. Fancy Coffee

Drinking fancy coffee daily is among the things people waste the most money on. An average cup of coffee in America costs around $2 to $5; rather than wasting it daily, it could be invested to make more money.

9. Dry Cleaning

Dry cleaning is among the 20 things people waste the most money on. Americans spend, on average, $25 to $30 on every visit to their dry cleaner.

8. Paper Towels

Paper towels rank among the 20 things people waste the most money on. The amount of money spent on excessive use of paper towels can be easily curbed by shifting to reusable cloth towels.

7. Unsaved Electricity

According to Forbes, Americans pay, on average, $429.33 per month on electricity bills. The amount of money spent on electricity can be saved by optimizing the use of electricity and turning off extra lights during the day and before going to bed.

6. Lottery Tickets and Gambling

Lottery tickets and the gambling habit are some of the things people waste the most money on. People waste hard-earned money on lottery tickets and gambling, hoping to hit a life-changing jackpot. According to a report by Fortune, poor households in America spend 33 times more of their income on lottery tickets than the rich. Instead of trying luck on the lottery and gambling, you can invest in stable blue chip stocks with a proven growth and profitability track record.

Click to continue reading and see the 5 Things People Waste the Most Money On.