10 Ways Americans Overspend

Are you trying to save money, but just can’t seem to make any progress? One of the easiest ways is to look at where you may be overspending.

According to Nerd Wallet, 84% of Americans with a monthly budget admit to sometimes exceeding their planned spending.¹ Here are 10 of the most common areas where Americans overspend.

1. Online Shopping

Online retailers know how to get consumers to part with their money. They offer deals, such as free shipping with a minimum amount spent, that encourage us to buy more than we should. They also often use dynamic pricing to entice you back to the website to check to see if the price has been lowered or if it will go higher. Retailers also email or text deals to lure you onto their site. Being aware of these marketing tactics is half the battle. To avoid overspending, it is helpful to shop with a list of what you need, not what you want.

2. Grocery Stores

Overspending on groceries often comes from the lack of preparation. Shoppers who go without a list, a meal plan for the week or without checking on the items they already have, often spend more at the register. Groceries are costing us more than ever so we need to prevent coming home to find we already have two jars of tomato sauce in the cabinet and could have saved $4. Impulse buying is another reason for a larger than necessary grocery bill.

3. Subscription services

Are you using everything you are subscribed to? Do you know how much you are spending on each subscription a month? How much a subscription costs, is often an area of disconnect for consumers. They know what subscriptions they have but are unsure how much they are paying each month. Check the cost and how often you use streaming services, along with other subscription services such as meal kits, beauty boxes and online fitness classes. How many services are you subscribed to and what can you drop to save $10, $20 or more a month?  

4. Technology

Do you really need the latest model cell phone? There is peer pressure and FOMO (Fear Of Missing Out) around the latest technology whether it’s a new phone, laptop or another gadget. Before rushing out to buy it, ask yourself if you really need it. Determine what are the pros and cons of this new device and will the price drop in six months.

5. Lunch/Coffee

How much are you spending on coffee? It’s one cost saving area that can help you cut back on spending. How much is buying lunch from the local deli costing? Consider preparation the night before or getting up a little earlier to make coffee or lunch in the morning.

6. Food Delivery/Dining Out

The average person spends $3,000 a year on eating out and food delivery.  Food delivery services seem to have become a staple in American households. However, while having someone else prepare your food is easier, home cooking is cheaper.

7. Entertainment/Travel

Concert tickets have reached unbelievable levels and it’s not just Taylor Swift tickets that have hefty price tags. Ticket prices for sporting events, movies, and amusement parks have also skyrocketed. Social media bombards us with friends and family members attending all these fun activities and amazing trips, which leads to overspending in this category. While you should take vacations and do fun things, make sure they are properly included in your budget.

8. Beauty Products

This category is another one where there is constant pressure to stay up to date with the latest trends. Influencers and beauty bloggers promote products on social media convincing us we need them. But do we? Instead of shopping at a specialty cosmetics store, look for similar products at the local drug store for a fraction of the price.

9. Gifts and Special Occasions

There is an unspoken expectation in our culture to exchange lavish gifts on holidays, special occasions, and birthdays. This often comes with extravagant celebrations. Celebrations do not need to break the banks. Look at budget friendly options for both parties and gift giving.

10. Housing/Cars

Living in a luxurious space may be good for your social media image, but how much is it costing you? According to a Harvard Joint Center for Housing Studies report, a record high number of Americans are “cost-burdened” with paying 30% or more of their income on rent.¹

Homeowners are also paying more then ever as prices have jumped 26% since 2020, reports the study. High interest rates are also increasing mortgage costs.¹

Not only is where we live seen as a sign of success, but so is the car we drive.  Luxury cars are often viewed as a status symbol, which can sometimes lead people to prioritize these types of vehicles over other financial responsibilities.

While cutting back in these categories may not seem to amount to much individually, taken together the savings can add up to a significant amount. 

Sources:

¹https://www.jchs.harvard.edu/americas-rental-housing-2024#:~:text=America's%20Rental%20Housing%202024%20%7C%20Joint%20Center%20for%20Housing%20Studies&text=Climbing%20rents%20in%20recent%20years,income%20on%20rent%20and%20utilities.