Americans Waste Over $100k On These 5 Things

A Penny Saved Is A Penny Earned

Americans are looking for ways to save money and invest for a more secure future. By cutting back on five categories where they typically overspend—dining out, alcohol, clothing and shoes, subscription services, and jewelry—they could save and invest significant amounts over ten years. This approach could potentially add over $100,000 to their retirement savings, demonstrating the power of saving and investing wisely.

Turning Pennies In To Dollars

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Transcript:

Austin, Americans are looking for ways to make ends meet and earn more money, not just for today, but for a more comfortable tomorrow and retirement.

Now, we looked at five categories where Americans overspend and look not just at how much they’re spending, but how much that money would be worth over 10 years that they invested and earned an 8% return, which is around what we’ve seen historically with indexes.

So what were the results of this study?

Yeah. So there are five categories where we see Americans constantly overspending.

And if you add up all these, it adds up to a really staggering number, not just the savings from these categories, but assuming that you invest those savings and, of course, grow it over the long run.

So let’s look at them.

Number one is dining out.

So the average American spends about three thousand dollars per year dining out.

And this is according to results from some of our own research on 24-7 Wall Street.

So if you take that $3,000 per year and you invest it for 10 years at an 8% return, that grows to roughly $45,000 over a decade.

That is a huge sum of money.

I mean, that’s a brand new, relatively premium vehicle.

Category two is alcohol.

So on average, Americans spend about $1,500 per year on alcohol.

This is according to data both from us and Money, Inc.

So if you take that $1,500 and you invest it over a decade earning an 8% return, it adds up to almost $23,000 per year.

Item three is clothing and shoes.

The average American spends about $1,800 per year on clothing.

Again, if you invest that in an 8% return over a decade, it adds up to over $27,000 per year.

Number four, and this is a new and actually growing category, particularly with some of the price hikes we’ve seen, subscription services.

So Americans spend roughly $600 per year on a variety of subscription services like gym membership, streaming, et cetera.

We could see that go as high as $800, even $1,000 per year with some of the new price hikes we’ve seen out of Disney, Netflix, and others.

This is according to data from Money, Inc.

If you invest that money, an 8% return over a decade, it grows to about $9,000 per year.

And then the last one is jewelry.

On average, Americans spend roughly $400 per year on jewelry.

If you invest that money in an 8% return, it grows to over $6,000 in a decade.

So let’s just summarize the potential investment growth and savings here.

Dining out, instead of spending that money, you invest it at 8% return, you can make about $45,000 in a decade.

Alcohol grows to almost $23,000.

Clothing and shoes grows to $27,000.

Subscription services over $9,000.

And jewelry over $6,000.

So if you add that all up, we’re looking at… and you no longer spend on these categories and you instead invest your returns, looking at people in 10 years, they could have over $100,000.

Now, of course, we’re not saying that people should not eat out for a decade, not buy clothes for a decade.

They, of course, have to do these things.

But what these figures really demonstrate is the power of saving and investing.

So maybe you don’t cut these categories out entirely, but can you reduce them 30% or 40% and instead invest that money for a brighter tomorrow?

We just hope that this is really illustrative for people looking to make better money decisions today.

It can be really easy to spend this money like dining out and jewelry and on an excessive number of subscription services.

When you look at how much that could grow to in a decade, it might really change your spending habits.

You know, Austin, I want to just highlight two key points here.

Number one, the median retirement savings for an American are $87,000 right now.

So cutting out these largely discretionary purchases over a decade would get someone to above the median savings.

That’s an incredible idea to think about.

Second, these are some categories that had a lot of inflation recently.

When we look at the overall trend, dining out got incredibly more expensive during COVID and also an area like subscription services.

A lot of these companies were bringing in consumers on introductory prices as they’re fine for market share.

And now they’re increasing prices.

We’ve seen with Spotify, we’ve seen with Netflix, we’ve seen it with Disney.

I could go on and on.

So looking at some of these categories that are emerging like subscription services, cutting things you’re not actually watching and getting rid of these categories, it might not sound like a lot on a monthly basis.

Add up over 10 years though, it’s higher than the median retirement for an American.

And going back to retirement, if you think about someone in their 40s or 50s today, they might be thinking a lot more about retirement.

They might be anxious about how much they saved on that journey.

But if they make some sort of decision today in a decade, they could be adding about $100,000 to that retirement cushion.

And of course, more if we extend that horizon to 15 years and 20 years.

So it really shows these are categories that people even maybe late into their savings years can cut to really catch up for a wealthy retirement much more quickly.

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