Here’s what experts say you should cut if you’re trying to save.
As we approach 2023, many people are considering New Year’s resolutions. One of the most popular resolutions is to save money or get on financial track. According to Fidelity’s Financial Resolutions survey, saving more money was the number one resolution respondents gave. About 43% of people said they wanted to resolve to put more money away. In addition, about 41% said they wanted to pay down debt, according to the survey.
When you’re trying to save money, it’s wise to start with a budget and review your expenses. You’ll want to break down your purchases into wants and needs or necessities vs discretionary spending. Depending on your finances, you may have a lot or very little you can cut. To get help deciding what you should cut from your budget, here’s what one expert believes is the worst thing to spend money on if you’re trying to save.
According to financial expert Dave Ramsey, the worst thing you could spend money on when you are trying to save money is a vacation. “When your goal is to save money now, a vacation is the worst thing you could spend your money on,” according to Ramsey. But is he right?
A vacation is discretionary spending, which financial experts recommend cutting first when you are trying to budget and get back on financial track. In that regard, Ramsey has a point. If you’re trying to save money, and don’t have a lot of extra cash, a vacation probably shouldn’t be high on your priority list.
On the other hand, studies have found that spending money on experiences can make people happier than spending money on items because the excitement we often get from purchasing things tends to diminish quickly as we get used to them.
Worst Things to Spend Money On
In addition to travel, there are other less responsible ways to spend when you are trying to save money. Here are other purchases you should avoid if you are looking to put away more cash.
While concerts and events can spark joy, they can also be really expensive. The average price of a concert ticket is $88, but you can expect to pay much more if you’re looking to attend a high-demand event like a Taylor Swift concert. Attending a concert or event every once and a while probably won’t throw you too off course from your budget goals, but if you are living paycheck to paycheck, cutting concerts and events could help you save.
Unused Memberships and Subscriptions
Memberships and subscriptions are often one of the first things people cut when they are trying to save money. You definitely don’t want to be paying for memberships or subscriptions you don’t use. Go through your bank and credit card accounts to make sure you aren’t paying any monthly fees for services you don’t need or use. While you’re at it, confirm that subscription prices haven’t gone up without you being aware. While companies need to provide you with notice when there is a price increase, emails can go to spam or go unnoticed. You might find that you don’t want to pay the new, higher subscription fee for a service.
Credit Card Interest
Credit card interest is one of the worst ways you can spend your money. While credit cards can be important tools, they can also get you into a cycle of debt. Paying interest eats away at your bank account and can prevent you from savings. It’s important to track your expenses and budget properly so that you can pay off your credit card balance before you owe interest.
According to a panel of financial experts compiled by the site Finmasters.com, the second worst way people can spend money (after credit card interest) is on a new car. Cars depreciate in value the moment they are driven off the lot. You can save money by purchasing a used car instead.
If you are making a New Year’s resolution to save money, you should create a budget and look at ways you can cut discretionary spending. According to financial expert Dave Ramsey, the worst thing you can spend money on when you are trying to save is travel. Other financial experts say the worst way to spend money is on credit card interest or a new car. Paying for memberships or subscriptions can be money better spent, and concert/event tickets can be one of the first things you look at cutting to help you build an emergency fund.