- Whether you’re overpaying for cellular data each month or choosing a large cable plan over streaming services, there are several ways you can cut costs and pay for only what you use and need.
- We spoke with several financial planners about common,expensive things that most people can do without.
Showing off lavish items is an undeniable aspect of American culture, but when it comes to making sound investments in expensive items, there are some purchases financial planners say you should exclude from your budget.
Several expensive items are becoming obsolete based on the age of their likely consumers. Millennials, for instance, are opting for streaming services instead of cable packages with hundreds of channels that will never be watched. Other things like unlimited-data plans are also not worth the money, according to one expert we spoke to.
Before making an expensive purchase, ask yourself whether you can find a cheaper product that will bring as much joy, Jeremy Straub, the CEO of Coastal Wealth, told Business Insider. He said that while asking for joy from a product may be cheesy, it could help you think of a big purchase differently.
Another question to ask yourself, Straub said, is: “Could I use this money on an experience that would last a lifetime?”
Business Insider spoke with several financial planners over email about common, expensive things that most people can do without. Take a look at the 12 items they say aren’t worth the money.
Unlimited-data plans look attractive on the outside, with a lure of saving, but the average person used about 2.8 GB per month in 2017, according to the Organisation for Economic Cooperation and Development.
“People should stop paying for data that they don’t use,” said Rob Webber, the founder and CEO of MoneySavingPro and an expert on saving.
One key thing to remember is that unlimited data doesn’t mean unlimited LTE or 4G data, Webber said – major carriers provide 22 to 50 GB of high-speed data before reducing speeds.
“This money could be allocated elsewhere in their budget,” Webber added.
The difference between gourmet coffee and coffee you make at home is the price and place of consumption. While many people prefer high-end coffee, it can be a spending trap, especially when you’re paying for the coffee to be made in front of you. Going to Starbucks once a day, for example, and spending $US3 to $US5 on a latte could cost you hundreds per month and thousands a year.
“You can make it yourself at home for much less,” said Megan Luke, a senior vice president at PNC Bank.
Making an investment in a luxury handbag or designer shoes can be worth the money if it spends more time on the streets than in a closet. But purchasing an entire wardrobe of name-brands clothes isn’t worth the investment, Straub said.
“Mix and match price points, and only invest in a few designer staples you can wear often and with multiple outfits,” Straub said.
Before running to the nearest Apple Store or to buy a new Android phone, take a step back and consider the necessity of an upgrade before spending a boatload on it.
“Consider this: you could pay $US550+ for the iPhone 7, or you could pay $US1,000+ for the iPhone X. The only main differences between the two are that the iPhone X can charge wirelessly and unlock your phone with your face. Could you live without those features? Definitely,” Webber said. “Could you find a better use for the $US450 you saved by getting the iPhone 7? Absolutely! My advice: buy a slightly older model for half the price.”
While many see a shiny, new, brand-name watch as a status symbol, it is not a necessity.
“Smartwatches have changed the game, so you don’t necessarily need a Rolex to show your ‘status’ anymore,” Straub said. “More and more wealthy people are choosing to wear an iWatch instead of the IWC.”
Cable TV plans
Netflix and save? Many millennials are not purchasing the large cable packages that their parents did. More and more people are ditching the dish and sticking to streaming because they don’t want to pay for hundreds of channels when they watch only a few, Webber said.
“My advice would be to opt for a live streaming service like Sling TV or DirecTV now and save 50%,” he said.
A dozen roses on Valentine’s Day
On average, a dozen roses will cost about $US50, box and all. For the holiday, show your love through more meaningful gestures, like cooking a meal or spending the day exploring something new, Luke said.
“There are less expensive – and more fun! – ways to show your affection,” she added.
Self-charging robot vacuums
Though these vacuums are popular, they are costly and tend to leave a spot. Additionally, they have little resale value if you decide you don’t want an automated machine wandering around your house, said Erach Screwvala, an estate-planning attorney.
“A traditional vacuum is a more cost-efficient option,” he said.
People tend to spend a good amount of money on large, heavy, expensive furniture to fit their perfect vision of a home. But for those who move frequently or change tastes, that isn’t the best investment, according to Straub.
“You don’t want to be stuck with pieces you have to sell for a fraction of your purchase price,” he said.
Overpriced steakhouse dinners
A luxurious date or group outing may include an over-the-top steakhouse dinner that you could easily enjoy for less money. Luke recommended trying local, lower-priced foods that can give you a great experience without hurting your wallet.
“Or, even better, make it at home,” she said.
Loans to family members
Lending money to family members is a slippery slope.
“We all too often see that the agreement of payback to our clients is never as discussed when it comes to loans given to family members,” Straub said. “I would try to stay away from these types of personal loans.”
It’s easy to think of jewellery as a good investment – and it can be when you have natural diamonds, emeralds, and other precious gems. However, Screwvala said your jewellery might not be as inherently valuable as you think.
When you’re looking into purchasing valuable stones, be sure to do your research. Screwvala said jewellers might use lab-grown diamonds with no inherent or resale value.
“As they’re neither precious nor rare, they won’t receive a meaningful appraisal, which means as soon as you leave the store the value will start to decrease,” he said.
Natural diamonds will retain their value over time because of their rarity, meaning they could be passed down from generation to generation or sold later down the line.
“If you are given the option, you should go for the real thing every single time,” he said.
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