How to Spend Money Wisely: 5 Habits to Watch

If you are reading this, you are probably here because you are all about spending money wisely. That being said, we are all guilty of slipping up at one point or the other.

It's easy to fall into the habit of buying expensive coffee every day. Many of us eat out or order in every day and we've all bought groceries that we've ended up throwing out. Sidebar, did you know that Americans waste almost 40% of the food they buy? Yikes! And then there's the money we spend buying clothes that we never wear and more.

I'll be the first to admit that I've had a couple not so great money habits in the past.

But what are the true costs of these habits when it comes to your finances? Finding out can be all the motivation you need to break a bad money habit. But first, let's go over what it means to spend money wisely.

What does it mean to spend money wisely?

Spending money wisely basically means getting the most for your money in line with what matters to you. This, in turn, helps you save more and puts you on the path to achieving your financial goals.

Now, let's run through some examples of some common spending habits that can easily derail our wise spending. This will show you how much you could actually be saving if you cut back or completely eliminate some of these! And in turn, help you with how to wisely spend money!

1. Eating out every day of the week

Do you find yourself buying lunch at work or ordering in more than a couple of times a week? We'll let's say the average cost of lunch for you is $10 a day. Multiply that by 5 days a week for one year and we're talking $2,600 in lunches and take out!

How to spend wisely: Cut back on buying lunch by a third or by half and put the money you don't spend towards savings or pay off debt. You'll be surprised how much you save when you cut back. Plus you can free up some extra money for your grocery budget and buy some of the nicer things you've always wanted to try out.

Combine that with meal planning and not only will you save a ton of money. You'll also be aware of everything you are eating from a health perspective because you picked it out and made it yourself!

2. Buying coffee every single day

Are you one of these people who needs that quick morning coffee fix? Find yourself stopping at Starbucks or Dunkin Donuts one too many times a week? Or even multiple times a day? Well, depending on where you buy your coffee or caffeine beverage, you can very well be spending an average of $4 a day for a single cup. Over one year that's $1,460!

How to spend wisely: Consider investing in your own fancy at-home coffee maker. It might seem like a big investment as good ones can range anywhere from $100 to $400, but if you are a big coffee drinker, you'll actually be saving a ton of money by making your own coffee at home. And over time your homemade coffee will come out to pennies compared to an average of $4 a day.

You can also try out the free coffee many workplaces offer. Yes, it might taste crappy at first because your taste buds have been conditioned to fanciness but over time you might just get used to the "ok" coffee at work!

3. Paying ATM fees

Ever taken money out of an out of network ATM and thought to yourself -  "It's only a $3 fee, it's not that much?" Well if you do this once a week or 4 to 5 times a month at an average of $3 per out of network withdrawal, then we're talking $180 in ATM fees a year.

Wouldn't you rather put that money to better use? It could go towards savings for a vacation, towards your emergency fund or to treat yourself to something nice.

How to spend wisely: Open a checking account with a bank that has no ATM transaction fees regardless of what ATM you use or one that reimburses out of network ATM fees.

You can also make sure to pull out enough cash from your in-network ATM based on how much you think you'll be spending each week and you can determine that by creating a budget!

4. Paying late fees

While this is not a spending habit, it can be indirectly related to not having enough money to pay bills on time which is directly related to your spending. If you've ever paid a late fee you know it sucks to pay one. Late fees are usually excessively high and if unexpected, can cause other issues like bank fees due to insufficient fees, etc.

In many instances, late fees average around $25 and if you are paying a late fee even just once a month, it can add up. $25 dollars once a month multiplied by 12 months is a whopping $300! Yuk!

How to spend wisely: Set reminders on your calendar around your bills and their due dates. Next, you want to become BFFs with your budget and this includes being aware of all your upcoming bills and expenses and also cutting back on bills that you have for things you don't use or don't need.

You can also call up your service providers or creditors and ask them to move your bill due dates to be closer to the dates when you get paid, that way you can plan to pay your bills as soon as you get paid.

5. Buying clothes you don't wear

If you were to take a look in your closet right now, how many clothes do you have with the tags still attached or that you planned to wear but never got round to or perhaps wore just one time?

It is common for people to spend a lot of money on clothes, shoes, and accessories but if you think you are only spending a couple of hundred dollars a month it's a good idea to take a step back and do an assessment on the "real amount" you are spending on your wardrobe.

Spending $200 a month on clothes (shoes and accessories) equals $2,400 a year. That can be a big deal if some of that money is put towards your financial goals.

Alternative: Before your next shopping, take some time out to clean out your closet to get rid of what you don't wear or don't need. Consider selling these items to make some extra money and then donate or give away what you can't sell.

Next, make a list of all the gaps in your closet. Basically the things you need but don't have and also the things you wear often but have worn out or gotten too old, and use that list as a guideline the next time you go shopping so you are buying things you know you will use (think cost per wear).

Finally, build your shopping into your budget and create a capsule wardrobe. Yes, it's ok to shop and buy nice things but you want to make sure you can afford what you are buying and it's not at the expense of your financial goals or obligations.


Do you have some spending habits you need to break? What changes do you plan to make to save some of your hard-earned money? Now's a great time to run your assessments and create your plans to start spending your money wisely.

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