20 ways to waste your money

By Kiplinger's Personal Finance Magazine

Whether a newbie or seasoned budgeter, nearly everyone has spending holes -- leaks in your budget that drain money with you hardly noticing.

These little drips can add up to big bucks. Once you find the holes and plug them, you'll keep more money in your pocket. That spare cash could be the ticket to finally being able to save, invest or break your cycle of living paycheck to paycheck.

Here are 20 common ways people waste money. See if any of these sound familiar, and then look for ways to plug your own leaks.

How to waste your money

1. Buy new instead of used. Talk about a spending leak -- or, rather, gush. Cars lose most of their value in the first few years, meaning thousands of dollars down the drain. However, recent used models -- those that are less than five years old -- can be a real value because you get a car that's still in fine working order for far less than the new-car price. And you pay less in collision insurance and taxes in the bargain.

Cars aren't the only things worth buying used. Consider the savings on pre-owned books, toys, exercise equipment and furniture. (Of course, there are some things you're better off buying new, including mattresses, laptops, linens, shoes and safety equipment, such as car seats and bike helmets.) For a closer look, see "10 things you shouldn't buy new."

2. Carry a credit-card balance. If you have a $1,000 balance on a card charging 18%, you blow $180 every year on interest. That's money you could certainly put to better use elsewhere. Get in the habit of paying off your balance in full each month.

3. Buy on impulse. When you buy before you think, you don't have time to shop around for the best price. Resist the urge to make an impulse purchase by giving yourself a cooling-off period. Go home and sleep on the decision. If you still want to buy the item a day or so later, comparison-shop, check your budget and go for it. Oftentimes, though, you'll probably decide you don't need the item after all.

4. Pay to use an ATM. A buck or two here and there may not seem like a big deal. But if you're frequenting ATMs outside your bank's network, the surcharges can add up. Put that money back in your pocket by using ATMs in a surcharge-free network such as Allpoint or MoneyPass.

5. Dine out frequently. A habit of spending $10, $20, $30 per person for dinner can be a huge drain on your wallet. Throw in a $6 sandwich for lunch and a $4 latte in the morning, and you've got quite a leak. Learn to cook, pack your lunch and brew your coffee at home -- you could save a couple hundred bucks each month.

6. Let your money wallow. If you are stashing your savings in your checking account or a traditional bank account, you are wasting money. You could put it in a high-interest online savings account and get paid to save. You can even get an interest-bearing checking account through such reputable companies as EverBank, Charles Schwab, E*Trade and ING Direct.

7. Pay an upfront fee for a mutual fund. Selecting no-load funds can save you more than the sales charges. Of course, no matter how well a fund has done in the past, you can't be sure how it will perform in the future. But if you pay a load, you'll begin the performance derby in the hole. See the Kiplinger 25 for some favorite no-load funds.

8. Pay too much in taxes on investments. Are you investing in a tax-sheltered 401k or Roth IRA? If you're not maxing out those accounts before you invest in a taxable account, you're spending too much.

9. Buy brand name instead of generic. From groceries to clothing to prescription drugs, you could save money by choosing the off-brand over the fancy label. And in many cases, you won't sacrifice quality. Clever advertising and fancy packaging don't make brand-name products better than lesser-known brands.

• 5 big bills you can cut fast

10. Waste electricity. Of the total energy used to run home electronics, 40% is consumed when the appliances are turned off. Appliances with a clock or that operate by remote are typical culprits. The obvious way to pull the plug on your energy vampires is to do just that -- pull the plug. Or buy a device to do it for you, such as a Smart Power Strip ($31 to $42 at SmartHomeUSA.com), which will stop drawing electricity when the gadgets are turned off and pay for itself within a few months.

Continued: Why pay banking fees?

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