In the land of endless opportunity, Americans work hard for their money. Even so, financial stress is very common. Many American share the fear and realization that they do not have enough cash to cover an emergency. To make matters worse, most Americans have not set aside what they need for a secure retirement. According to the Employee Benefit Research Institute (EBRI), 47 percent of American workers have less than $25,000 set aside for retirement.
The reason? Wasteful spending. A recent survey by Hloom of more than 2,000 Americans revealed that 80 percent are throwing away their hard-earned money through wasteful spending. Even more surprising, when asked, those surveyed were only willing to consider changing some of their wasteful behaviors.
Top 5 money wasters Americans are willing to reduce
- Eating out – 68.89% percent waste cash on dining out.
- Drinking – 25.42% percent felt that their spending on alcohol was wasteful.
- Credit cards – 19.34% percent waste money on credit card interest.
- Clothing – 13.85% percent felt cash was being wasted on clothing purchases.
- Electricity – 11.92% percent said they were wasting money on electricity.
Top 5 wastes of money Americans resist giving up
- Uneaten food – 32% surveyed wasted cash on food they do not eat.
- Groceries – 25.37% waste money on groceries.
- Activities – 23.44% waste cash on hobbies (millennials were the most likely to waste cash in this category).
- Entertainment – 23.10% waste cash on entertainment (again, millennials made up the majority of spenders in this category).
- Streaming services – 18.55% waste cash on streaming services.
Consumers are not the only ones who are guilty of overspending. Businesses – especially business startups – also fall victim to extravagant spending. Many also fail to set aside a cash cushion for a rainy day and/or mismanage their cash-flow. In a tight situation, these businesses turn to lenders like First American Merchant for business funding solutions. With a strong financial budget, managed spending and outside financing, businesses can avoid common money mistakes.
And what about the entrepreneur themselves? Are you currently struggling with the consequences of overspending? Do you want to have a larger emergency fund for peace of mind? Maintaining a cash cushion is not just for businesses; it is crucial for personal finances as well. Believe it or not, you do not have to give up all your “wasted” spending to strengthen your finances. Simply spending smarter and reducing waste will go a long way to increase your cash on hand. The key is to know where your money is going, and then make adjustments when necessary.