10 bad money habits that could cost you $12,872 a year

Are you guilty of any of these bad money habits? You might be more careful when you see how much they could potentially cost you each year.

When you think of bad habits things such as gambling or smoking probably come to mind. And while these may cost you money there are plenty of other, more innocuous, bad habits that could be hurting your hip pocket.

I have identified 10 bad habits that many of us might be guilty of. Some examples include letting your insurance renew automatically, mindless spending and using the dryer instead of hanging your washing out on the line.

Plus, I have crunched the numbers and found these bad habits could be costing you $12,872 a year! It’s important to note that the numbers are based on hypothetical scenarios (and the costs may be higher or lower for your situation) but you can certainly get an idea of how quickly things can add up.

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1. Letting your insurance renew automatically

Many of us get complacent and don’t shop around for a better deal when our insurance is up for renewal. This is especially the case if you are paying by the month because the payments keep coming out of your account and you know you are still covered. You might say you’ll get around to it but before you know it another year has passed…

It can definitely pay to shop around. Canstar crunched the numbers and found that the average car insurance premium for a 30-49 year old in NSW is $1,411 but the lowest is $872. That means you could potentially save $539 a year by switching. The table below also shows the potential savings for hospital cover ($693) and home and contents insurance ($436). The total cost of letting your insurance renew automatically in this case could be $1,668 a year. Just make sure that you are comparing like for like and that you are still getting the same level of cover before switching to a cheaper product.

Potential annual savings – switching from average to lowest insurance premium

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Source: www.canstar.com.au. Prepared on 05/09/2022. Car Insurance: based on comprehensive car insurance policies rated in the Canstar 2022 Car Insurance Star Ratings. Premiums are based on a 30-49 year old in NSW and include quotes for both new and used cars for a range of scenarios, with a target excess of $600-$750. Hospital Insurance: based on Gold Hospital policies available for a single in NSW, with all excess options considered. The Australian Government Private Health Insurance Rebate, Base Tier for under 65s, of 24.608% has been applied to premiums. Home & Contents: Premiums based on quotes obtained for Canstar’s 2022 Home and Contents Insurance Awards and Star Ratings (August 2022), for a range of addresses, property assumptions and building sum insured amounts. Premiums based on building sum insured amounts between $200,000 and $1,800,000 and a contents sum insured of $50,000.

Potential cost: $1,668 a year

2. Mindless spending

It might not feel like a big deal to spend $5 on a doughnut and coffee when out and about or to throw a $7 magazine into your trolley at the supermarket, but these types of impulse buys can really add up. Even spending $5 a day adds up to $1,825 a year. Now I’m not saying you can’t buy any small luxuries – just make sure they are factored into your budget so they don’t interfere with your financial goals.

Potential cost: $1,825 a year

3. Not paying yourself first

One of the best things you can do with your money is to pay yourself first. This basically means that once you work out how much you can save from each pay you arrange to have it automatically transferred to a separate savings account before you can get your hands on it. Ideally, it’s a good idea to aim to save at least 10% from your pay.

Let’s say you earn the average full-time wage in Australia, which according to the Australian Bureau of Statistics is  $1,769.80. This works out to be $1,342 after tax. Not putting away that 10% each pay could cost you $6,978 over the year.

Potential cost: $6,978 a year

4. Using the dryer rather than hanging the washing out

Using the clothes dryer may feel like a more convenient option than hanging your washing out on the line, but it can cost you more in electricity. Canstar crunched the numbers and found that assuming you put six loads of washing each week in the dryer, it could cost you $336 a year. Is the convenience worth that extra expense?

Cost of using a dryer instead of hanging clothes out

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Source: www.canstar.com.au – 05/09/2022. Average energy consumption figures based on 5-10kg condensor clothes dryers listed in the Commonwealth of Australia E3 Program’s Registration database. Average usage cost based on single-rate products on Canstar’s database, available for an annual usage of 4,372 kWh.

Potential cost: $336 a year

5. Washing in warm water

If you use warm water to wash every time you do a load of laundry, you might want to think again. Each time you wash using hot water, it will cost extra to heat up the water, whereas cold water doesn’t require any heating. Canstar’s analysis found that assuming you do seven loads of laundry a week, using warm water instead of cold could potentially cost you an extra $88 a year.

There will be times it may be better to wash in warm water – for example, if the items are very dirty or are stained – but using cold water most of the time can save you money.

Cost of using a warm wash cycle on a washing machine

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Source: www.canstar.com.au – 05/09/2022. Average energy consumption figures based on 5-10kg washing machines listed in the Commonwealth of Australia E3 Program’s Registration database; only includes products that have both warm and cold wash cycle energy consumption data available. Average usage cost based on single-rate products on Canstar’s database, available for an annual usage of 4,372 kWh.

Potential cost: $88 a year

6. Not sticking to your shopping list at the supermarket

You know what it’s like – you’re at the supermarket and a new brand of biscuits catches your eye. It may not have been on your list but you think there’s no harm done. Then you think to yourself you could do with some tea to have with those biscuits so you add tea bags to your trolley as well.

A 2015 Journal of Marketing study found that you’re more likely to spend money on unplanned splurges as your shopping trip progresses. “Buying one thing you weren’t planning on getting makes you remember all of the other things you might have needed but didn’t put on your list, so that first impulse item you pick up opens the floodgates,” explained an article on the Time website about the study.

That’s why it’s important to stick to your list. It’s also a good idea to limit your supermarket visits to once a week rather than going every few days. The more often you go the more likely you are to be tempted to make an impulse purchase – or two.

Aussie households spend on average $152 per week on groceries, according to Canstar Blue’s latest survey of supermarket shoppers. If you spend an extra 10% on impulse purchases that would cost you an extra $790 a year.

Potential cost: $790 a year

7. Waiting for your petrol tank to be empty before filling up

If you wait until your fuel tank is empty before you fill up you are at the mercy of the petrol price cycle and you could potentially end up paying much more. The ACCC, which tracks petrol price cycles, explains that petrol prices move up and down in regular patterns or cycles. “The cheapest and most expensive days to buy petrol can change from cycle to cycle. Use price cycles to help you decide when to buy petrol,” says the website.

If you paid, on average, 10 cents a litre more each time you filled up a 50-litre tank the cost would come to $130 a year. This assumes you fill up once a fortnight. So it is a good idea to keep an eye on the cycle in your capital city. There are also a number of fuel apps that can help you find the best price near you.

Potential cost: $130 a year

8. Buying water when you’re out rather than taking your own bottle

We have all done it at one point or another – forgotten to take a water bottle with us when out and about and resorted to buying a bottle. Not only is this bad for the environment but it can put a bit of a dent in your wallet. Even if you did this once every two weeks it would cost you $91 a year – that’s assuming you paid $3.50 for a bottle of water each time. It may not seem like a lot but remember every little bit counts.

Potential cost: $91 a year

9. Paying for subscriptions you don’t use

It might be a free trial that you didn’t end up cancelling or a gym membership that you are no longer using, but the cost of unused subscriptions can really add up.

Research by ME found that 48% of Aussies have forgotten about at least one recurring paid subscription service and 34% are paying for subscriptions or memberships they don’t use. According to the survey, Aussies are wasting, on average, almost $200 a year on unused subscriptions. Gen X-ers are the worst offenders of all generations, wasting up to $570 annually.

Take a good look at your bank account statements and put together a list of any subscriptions you are paying for. Think carefully about whether you are making good use of them. If not, consider giving them the flick.

Potential cost: $200

10. Not comparing prices

If you have seen something you want to buy then it pays to take the time to shop around to find the best price. I have even googled prices at the actual store before handing over any money. Some stores may match – or even beat – the price if you can prove you are able to get it cheaper elsewhere.

I looked at three items you might buy in a year to see what savings could potentially be made by shopping around.

The first was a Fisher & Paykel 569L ActiveSmart French Door fridge. At the time of writing the price ranged from $2,550 to $3,248 – a difference of $698.

Next, I went on the hunt for a pair of Levi’s Mile High Super Skinny Jeans in the New Moon colour. The RRP is $109.95 (and this was the price at most stores) but at the time of writing, Just Jeans had them on special for $76.96 – a saving of about $33.

Finally, I wanted to find the best price on a pair of Adidas Stan Smith’s. Prices ranged from $105 to $140 – a difference of $35.

Adding the savings of all three together comes to $766.

Potential cost: $766

Cover image source: Michael Leslie/Shutterstock.com.