Are You Piddling Away Your Money?

by Derek

There are so many people in this world that simply can’t get ahead in life. It seems that no matter how hard they try, they just can’t seem to make ends meet. I sympathize with a small handful of these people (because they actually do have problems that are beyond their control), but as for the rest, I feel that they are just piddling their money away, and they don’t even realize it.

Money Going Up in Smoke

What Are They Spending Their Money On?

I think you know where I’m going with this… There are millions of people that choose to spend about $3 or more every day on a ridiculous habit that actually hurts them in more ways than one. It’s proven to reduce their lifespan, it enhances their ugliness, and it drains their pocketbooks! Yep, it’s all due to this nasty habit called smoking. Since we all know it’s a waste of money, I won’t dwell on it, but let’s explore how much money we are actually losing with the spending habits of about $100 a month.

The Compound Interest of $100 a Month

Since the average smoker spends about $100 a month (most of them probably spend more actually), you might say that they waste about $1,200 every year. This is actually an understatement. Since this money could have been used for an investment, the loss is actually much greater!

If the markets began to grow like they used to (and it looks like they’re starting to come back recently), the typical investor could expect an average of 12% return on their investment. If, instead of smoking, you decided to invest $100 a month from age 18 to age 68, how much do you think you would acquire? This number will blow you away – it actually surprised me a little! $3.94 million dollars!

Stop Shaking Your Head at the Smokers

For all of you that are looking down on smokers, I would stop shaking your head if I were you. I would say that 99% of us have these $100/month habits. Yours might be Godiva Chocolates, or maybe it’s your everyday coffee, or you might enjoy bringing home trinkets for no real reason. There are so many habits that can sneak $100 out of our account each month! And ultimately, $3.94 million dollars is wasted.

Study That Budget

I admit it. Budgeting is no fun. But without it, we’re no doubt losing millions of dollars because we have no idea what we are doing with our money! Tell your money where to go and you’ll have a rich future!

Can you think of some other habits that are a waste of money?

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So You Think You Can Save December 7, 2011 at 7:12 am

There are a ton of things like this that you could save money on: Drinks, fast food lunches, lunches out, going golfing every weekend, and that’s just a few. One of the biggest challenges is that even if we cut some of these activities out, they either don’t last or we re-direct the money somewhere else, so we don’t ultimately save it.

Derek December 7, 2011 at 8:16 am

You’re right! I’d say 90% of us have something that we throw our money into every day! They question is, “Is it really worth losing $3.94 million dollars?” 😉

shanendoah@the dog ate my wallet December 7, 2011 at 10:34 am

This is why I’m not allowed to carry cash. I piddle it away on vending machine snacks and chai lattes from the cafeteria. I do not need these things. I have tea I really like in my desk and trust me, I don’t need the snacking calories.
This is actually why I set no spend goals for each month- to help me be conscious of what I’m spending my money on. Is it something we need then I buy it, but if it’s just because I have the boredom munchies at 2pm, then I don’t need to be spending.

Derek December 8, 2011 at 2:48 am

Those munchies can get you sometimes can’t they? I see a ton of people do that at my workplace – I think the worst money-waster is coffee though. They spend $2 on the “good stuff”, even when there’s free coffee in the breakroom!

Jana @ Daily Money Shot December 7, 2011 at 11:30 am

My two worst habits are soda and iTunes. I’ve gotten a lot better with iTunes and will now only purchase apps or songs if I have a balance on a gift card but the soda is a killer. I spend $.75 per day on a can of soda at work (M-F). I tell myself it’s OK because the money goes to charity but it’s really not. I’m just rationalizing. Sure, it’s only $3.75 per week and it’s not killing my budget but there is a lot more I can do with that money per week.

Derek December 8, 2011 at 7:28 am

Mmmm. Soda and iTunes! Yep! I’ve seen that before! You’re definitely not alone with those habits.

Start adding up that $3.75 per year and per your lifetime (including interest), and you’ll soon realize that it might not be worth it!

Maggie@SquarePennies December 7, 2011 at 7:03 pm

Derek, I see a lot of people piddling there money away as a lifestyle. It’s practically their hobby to spend money on things they don’t need. They just keep stacking it up and stacking it up. Then they have to buy a storage shed to keep it all.

Corey @ Passive Income to Retire December 7, 2011 at 8:06 pm

I couldn’t agree more. It is easy to point the finger at smokers, but we all have our places where we spend our money.

Derek December 8, 2011 at 7:29 am

We sure do! I have my areas as well. It used to be golf – I still do love to play, but if I keep my ears open for those free deals instead of paying $40 for a “nice” course.

Derek December 8, 2011 at 2:50 am

Haha! I know what you mean about the storage shed! I have friends that found themselves in this situation because they simply had too much STUFF! My wife and I will never get there. We basically have an empty basement right now! 😉

ProfitsOn December 8, 2011 at 11:12 am

Yes, smoking is an expensive addiction. Money is wasted in air. I quit in 96’. One of the best things I ever did.

If history repeats itself, stocks might not be a good vehicle at the moment, despite short-term rebounds here and there.

In the past 100 years, the DJI showed a tendency to top every 35 years: 1929, 1965, and 2000. It then moved laterally for 13/17 years, before resuming the long-term uptrend. Within these consolidations, it topped/bottomed every 4/5 years.

Of course, past performance is not a guarantee of future results.

Derek December 8, 2011 at 4:15 pm

Nice analysis! I’m glad that I am young and can benefit from that upward trend in the future!

Hunter - Financially Consumed December 8, 2011 at 12:48 pm

Diet Coke – and it’s not even working!

Derek December 8, 2011 at 4:16 pm

Haha! If it’s not working, you might want to get used to the drinking fountain! 😉

ProfitsOn December 9, 2011 at 8:54 am

Thank you, Derek.

Yes, there is always a light at the end of the tunnel.

Broke Boomer January 1, 2012 at 4:49 pm

I’m a rent slave. No matter how hard I try, I can’t stop blowing at least half my money on rent every month. It costs 18 percent more to rent here than to buy so my rent addiction is costing me a lot of money.

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