Wasteful or purposeful expenses: Which side do you choose?

 

It’s the start of the year again – well sort of, considering it’s already April – and just like the day before the Chinese new year, it’s time to do some spring cleaning. But instead of picking up a broom, I’m picking up a ruler and running it through my bank statement.

I like to do this regularly to ensure that I am on top of my spending.

I get all warm and fussy inside when I know I’m on track for my monthly budget; Yes I’m financially weird that way!

As my ruler traverses down the statement, I ask myself this; are these items wasteful or purposeful expenses?

Choosing the right path could mean being rich and successful, and not being successful!

Which path did you choose? cc Chris Smith

IRK factor

I speak to a lot of young adults about money, and nothing irks me more than finding out hard earned money is wasting away without any purpose.

A common reason for that happening is complacency. Simple as that.

My account has a monthly direct debit arrangement for Pay TV that I hardly ever have time to watch. It was signed up last year and I can’t be bothered canceling the service because I want to have the option of watch it occasionally.

My new year resolution was to get fit so I joined a gym. I’ve now given up now because I got lazy, but I’m still paying for it because I can’t be bothered cancelling the membership.

My account has a monthly direct debit arrangement for Pay TV that I hardly ever have time to watch. It was signed up last year and I can’t be bothered canceling the service because I want to have the option of watch it occasionally.

These type of expenses are completely and utterly wasteful – URGH!!

I’m not perfect and I sometimes spend wastefully as well, so that’s why I run the ruler over my bank statement regularly.

I find that periodically reminding myself of my expenses makes the arduous task of reaching my financial goals that much easier.

But what can I do if my spending has a purpose?

Purposeful expenses on the other hand are what I call good expenses. These expenses are what we need to survive, to live life.

But even though they are essential, you can still save money on them.

Here’s how.

Love of Oysters

Buying oysters direct from South Melbourne market works out to be alot cheaper than having them at restaurants

I love oysters, and could have a dozen just by myself. But I don’t ever order it at restaurants because they usually charge $4 an oyster. I save by buying direct from the fish market where it averages $1, and I get to choose from a variety of species too. Yum yum in my tum tum at a cheaper rate per oyster – definitely a better way to enjoy my love of the sea.

Books and DVDS

Are you buying your books and DVDs from high street stores where goods are horribly overpriced? A copy of the newest Final Fantasy game cost $79 at JB Hi-Fi vs $56 on Amazon. A used copy is even cheaper, coming in at $39. Better yet, go down to your local library and you’ll be amazed at the catalog of updated books and DVDs on the shelves – ALL FOR FREE.

OzBargain

The go-to-website for all things bargain. A very active forum that lists bargains across Australia, it is religiously followed by all money conscious individuals on the prowl for the next good deal. I myself have secured plenty of fantastic bargains on this website, and I am proud to be an OzBargainer. Go on and be an OzBargainer yourself.

Online courses for everything you can think of

Want to learn a new skill in your spare time? Websites like udemy and coursera periodically offer online courses for the cheap price of $0. I took a blogging course on udemy which allow me to create this website from scratch in the comfort of my own home in my PJs.

International phone calls and messages

No one with a smartphone should ever pay for international phone calls and messages in my opinion. Calls and messages over traditional mobile service costs as much as $1 a minute, and your phone bill could very easily get out of hand. Services like viber, skype, and Facetime all provide calling and messaging services over the internet and are free to use. So USE IT to save yourself a small fortune in telephone bills!

Pay TV subscription

Subscription Video on Demand (SVOD) service Netflix recently launched in Australia and has taken the pay TV world by storm. Looking at the incumbent service Foxtel, pricing starts at $25 a month while Netflix starts at $8.99 a month – a saving of $16 per month, or $192 a year. If you don’t want any sports and news channels as offered by Foxtel, maybe Netflix is the way to go?

Stockpiling groceries when they are on sale

Supermarkets run discount campaigns periodically, and it’s worth to keep an eye out for them. Non-perishable staple items like detergent, soap and toilet paper won’t ever expire, so stock up when it goes on discount.

Cut fruits on the weekend and make your own juice

Cut Fruits stored in boxes that will enable easy juicing during the week

There’s nothing better than a freshly squeezed watermelon juice on a hot summer day. Unfortunately, they cost a lot to get them from a drinks kiosk at the shopping center; sometimes up to $8 a cup. I go to the market on the weekend and buy my selection of fresh fruits, spend a few minutes cutting them and viola I have my very own supply of fruits for juicing during the week. $8 worth of fruits can yield me freshly squeezed for a week – a huge saving!

Paying for health insurance you don’t need

Have you revisited your health insurance lately? I was being wasteful in my health policy because I was paying for medical conditions that were statistically improbable. Items like knee and hip replacement, cataract surgery, cardiac valve replacement – these are medical conditions present in over 50s, so paying for them when you are in your 20s are wasteful. It doesn’t mean that the medical conditions won’t happen to 20 year olds, but like I said it is statistically improbable; you can’t insure yourself for everything.

Over-insuring on life insurance

Similarly to paying for health insurance, many people don’t realise that they are over-insuring on their life insurance policies. How many people actually understand the real purpose of life insurance policies? These policies are there to ensure that when the insured dies, there is enough money paid out by the policy to eliminate their outstanding liabilities so it doesn’t burden surviving family members. There are alot of people in their 20s paying for policies that pay out $1 million dollars upon death – the question has to be asked ‘is it realistic for a 20 year old to have $1 million in debt?’. The answer is no, but sadly most 20 year olds don’t realise this and have been over-insuring on their life policy – a very wasteful expense.

You’d surprise yourself

As a writer of a finance blog, I assume I am always aware of my expenses and that I am never spending wastefully, but I surprise myself every single time when I do this exercise. There is always room to improve, always more wasteful expenses to cut and always more bang-for-buck you could achieve on your money. The aim is to slowly but surely spend only purposeful expenses; and that is the key to bringing us closer to our financial goals.

Have you found any expenses that have been wasteful? Let me know in the comments below.

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