We can\u2019t tell the difference between needs and wants and are unable to delay gratification<\/p>\n
From the lofty perch of old age, and after a lifetime of thrift, I declare that I am qualified to comment on how not to waste money.<\/p>\n
We\u2019ve all heard the reports: Most Americans live paycheck to paycheck, a large number can\u2019t come up with $400 for an emergency, and there\u2019s no money to save for retirement and other goals.<\/p>\n
Most of that data comes from surveys where people are, in effect, saying they don\u2019t have enough income. My curmudgeonly reaction: Stores, fitness centres and entertainment venues are packed with shoppers, many of them buying unnecessary goods and services.<\/p>\n
If three-quarters of Americans are living paycheck to paycheck, how can they afford to spend like this? It\u2019s a funny thing: I have yet to see Warren or Bill in one of the many local spas.<\/p>\n
Most Americans live like no other people on earth. We have more and bigger stuff: Larger houses, bigger vehicles, more shoes.<\/p>\n
And, in my not so humble opinion, we can\u2019t tell the difference between needs and wants, between necessities and desires\u2014and we sure can\u2019t defer gratification.<\/p>\n
All this leads me to one conclusion: We\u2019re unable to control our spending or manage our money. Here are 16 things that this 75-year-old considers big money wasters:<\/p>\n
1. Tattoos. They\u2019re an admitted obsession of mine. What will they look like when you\u2019re my age? From what I\u2019ve heard, a good tattoo artist charges $200 an hour.<\/p>\n
2. Vacations. Hey, everyone needs a break. But you don\u2019t need to go into tuition-level debt to have a good time. Your kids will survive if they never visit the Magic Kingdom.<\/p>\n
3. College. Picking a college involves many factors. Affordability is one that\u2019s often overlooked. If the cost of the school you choose will land you in debt, you\u2019d better have a plan for paying it off. Don\u2019t mortgage your future, just so you can have a prestigious decal on your car window.<\/p>\n
4. Restaurants. Eating out, or buying $4 designer coffee, is expensive and\u2014wait for it\u2014it\u2019s also a luxury. Skip that daily $4 coffee and after 30 years you\u2019ll have more than $121,000, assuming a 0.5% monthly return.<\/p>\n
5. Opportunities lost. We do it every day by failing to grab the employer match on our 401(k) plan, not investing in a tax-free Roth IRA, failing to fund a flexible spending account to pay medical costs with pretax dollars, and withholding too much from our paycheck, so we\u2019re essentially making an interest-free loan to the IRS.<\/p>\n
6. Transportation. You don\u2019t \u201cneed\u201d an SUV or $40,000-plus pickup truck to get from A to B. My four kids grew up riding in our 1972 Duster. Now they, too, all have trucks or SUVs.<\/p>\n
7. Credit cards. When people say they live paycheck to paycheck, does that include purchases put on credit cards that aren\u2019t paid off that month? In that case, they\u2019re spending more than their paycheck\u2014and what they buy will cost them the purchase price, plus a hefty interest rate.<\/p>\n
8. Lottery. The lowest-income groups spend the most on lottery tickets, wasting hundreds of dollars a year\u2014about the same as that $400 emergency fund they don\u2019t have. Not to worry: 60% of millennials think winning the lottery is part of a wise retirement strategy.<\/p>\n
9. Clothing. My new condo has two bedrooms and three walk-in closets, two of them larger than the bathroom in my old 1929 house. The average adult spends $161 a month on clothing. We are obsessed with keeping up with the latest fashions and ensuring nobody sees us in the same clothes twice.<\/p>\n
10. Shoes. Surveys suggest the average American woman owns more than 25 pairs of shoes, which they admit they don\u2019t need. So why buy so many pairs? It seems shopping and wearing trendy stuff makes us feel good.<\/p>\n
11. Tchotchkes and stuff. Clean out a house after many years\u2014which my wife and I just did\u2014and you often hear the words, \u201cWhere did we get that?\u201d Though relatively inexpensive per item, tchotchkes and similar stuff cost money\u2014and it all adds up.<\/p>\n
12. Failing to look ahead. Henry Ford said, \u201cThinking is the hardest work there is, which is the probable reason why so few engage in it.\u201d I still marvel that people spend so little time thinking about retirement. After working 30 to 40 years, they reach retirement with no plan and are shocked they can\u2019t live on Social Security alone. Planning for retirement early in your career is essential for financial security\u2014and it isn\u2019t that hard.<\/p>\n
13. No backup plan. I like to think ahead about \u201cwhat ifs\u201d and how I\u2019ll deal with them. In my head, I have backups for the backups. I recently took out a large mortgage to buy a condo. Now I\u2019m thinking, \u201cWhat if I can\u2019t sell the house to cover the mortgage? What if I must do some upgrades to sell the house?\u201d I temporarily stopped reinvesting my tax-free bond interest, so I can build up more cash\u2014just in case.<\/p>\n
14. Holidays. Somehow, every December, financial caution goes out the window and we pay for it the following year. But my pet peeve are those inflatable characters on lawns that cost hundreds of dollars. Talk about blowing money.<\/p>\n
15. Toys. One study shows that U.S. parents spend $6,500 on toys during a child\u2019s upbringing. The spending is even higher for millennials, who favour \u201csmart\u201d toys\u2014toys that do the thinking for the child. There\u2019s something wrong with this picture. Hey, I\u2019ll challenge anyone to a contest dropping clothespins into a milk bottle.<\/p>\n
16. Haircuts. The average haircut reportedly costs $28.30 in a barber shop. Many men pay a lot more. Nowadays, nearly a third prefer a \u201csalon.\u201d I pay $12 at my local barber. But I\u2019m still annoyed: My hair is disappearing, but the price is inching up.<\/p>\n
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