Personal Finance

Dave Ramsey says this tiny change could save you thousands every year

Ian Cooper

Published: November 12, 2024 8:45 am

It’s very easy to lose track of your spending, or what you’re spending on.

If you get coffee or go out to eat every day at lunch, it all adds up. You may actually be spending thousands on things you really don’t need. In fact, according to financial coach, Dave Ramsey, if you spend just $13.70 a day on things you may not need, that’s $5,000 a year.

And while $5,000 isn’t a lot for some people, it is for those struggling to save, to build a retirement account, to invest, or to pay off nagging debt.

So, either knock it off, realize what you’re spending, and, or cut back.

Key Points About This Article:

• According to Dave Ramsey, if you spend just $13.70 a day, that’s $5,000 a year.
• The average adult spends about $1,497 every month on wants, or non-essentials, as once noted by insurance company, Ladder.
• On average, Americans dine out three times a month.
• Also: Take this quiz to see if you’re on track to retire^(Sponsored)

What Are We Wasting Money On?

At the moment, the average American adult spends about $1,497 every month on wants, or non-essentials, as once noted by Ladder, as noted by CNBC. That comes out to just under $18,000 a year, which you could have used for retirement or an emergency fund.

In addition, about 81% of Americans dine out at least once a month. About 31% eat out once a week or more. Also, on average, Americans dine out three times a month. The average American also orders food delivery about 4.5x a month. We also spend an average of $166 a month on dining out, which is about $2,000 a year. Others, such as Ramsey Solutions say Americans spend $3,639 a year on dining out, or about $300 a month.

While dining out is easier than cooking at home, it can also be costlier if you’re trying to save.

Americans also spend about $1,945 a year on clothing and apparel, according to Statista. We also spend gobs of money on lottery tickets. According to The Economist, “In the poorest 1% of zip codes that have lottery retailers, the average American adult spends around $600 a year, or nearly 5% of their income.” In 2023, the average American spent $50.19 on lottery tickets.

Unless you’re a statistical genius, your odds of winning the lottery is one in 300 million.

Many of us spend too much on extended warranties, as well. But in most cases, it’s a waste of money considering they’re not cost-effective.  Granted, some take out an extended plan for peace of mind, but to lay out about $108 a month for it is obscene.

Many of us are spending ridiculous amounts of money on cable TV, and even impulse purchases. I bought an exercise bike, for example. It now serves as a coat holder.

But again, if you’re spending about $13.70 a day on frivolous things, you often rob yourself of savings you could use for retirement.

Here are some of the top ways to save money, according to Ramsey Solutions.

Now that we’ve identified where the average American spends money frivolously, let’s look at some of the top ways to save, according to Ramsey.

One, set a savings goal with a specific dollar amount with a set deadline.

Two, set up direct deposits to go into savings. This way, you don’t have to put a lot of effort into thinking about saving. It’s just automatically done for you. Plus, you don’t have to directly deposit 100% of your pay. Instead, start out small at 5% to 10%.

Third, cancel memberships or subscriptions you don’t need. For example, I’ve been paying for membership at a gym and I’ve gone maybe five times over the last year. Fourth, stop going out to eat as frequently as you may be going.

Five, adjust your tax withholdings. If you’re getting back big refunds every year, you’ve been loaning the government your money with no interest. Instead, adjust.

Six, get rid of debt altogether or at least get a handle on it.

At the moment, the average student loan payment every month is $500, with the average borrower needing 20 years to pay it off. The average monthly credit card payment is $50 to $202 per month, with interest if you don’t pay it all off. And the average car payment is now between $100 and $644 a month.

If you can get rid of that debt, do it.

In addition, you may want to speak with a financial advisor about your finances and your goals, especially if you do want to retire comfortably.