The year is finally coming to an end, so it's time to review your 2022 spending habits. One of the best ways of doing that is to look at your purchases. Did you buy any expensive or unnecessary products and services? Is there a better way you could have spent your money?
Reviewing your spending at the end of the year has various benefits. The main one is that you can gain valuable insights into your financial habits. This can help you to make changes to improve your financial health going into the new year and be mindful of how you spend money. It can prompt you to recognise bad spending habits like impulsive shopping and people-pleasing.
With that in mind, this article will highlight ten things you should never have bought in 2022 and what you can do to avoid the same spending mistake in 2023. Read on.
This is a common way people usually waste money without even knowing. There are two main reasons for this: we associate name-brand products with quality and luxury. But in reality, it is the brand marketing that has forced you to believe that.
Spending money on name-brand products isn't necessarily a bad thing. In some instances, it's recommended. The trick is knowing when to buy them and when to avoid them. Once you have that figured out, you can buy essential everyday products without overspending.
Next time you shop for milk, rice, toothpaste, or detergents in a supermarket, try comparing the prices. A packet of 500ml from a lesser-known brand will always be Ksh10 to Ksh30 cheaper than the bigger brand; the same goes for detergents. The price difference between name-branded 2 KG rice and a generic brand can be as high as Ksh100. The price difference doesn't mean one is better. After all, they all have KEBS marks of quality.
You should only pay the extra price when it's justified. If, for instance, you are in the market to buy a TV. It could make sense to go for a name-brand product as they tend to last longer, come with a warranty, and are easy to repair. But there's no reason to spend an extra Ksh100 to buy well-packaged toothpaste.
When you travel to new destinations, you want to create memories you can cherish forever. And one common way of doing that is by buying souvenirs. Souvenirs are like memory bits. People spend thousands acquiring them because they remind them of a place they visited. But in most cases, they have no economic value and just increase your travel budget.
Instead of buying souvenirs, there are alternative ways to remember your trip. One option is to document your experiences by taking pictures and videos. You can also use your money for better, like immersing yourself in the culture of the community you visited. You can buy their food, learn their traditions, and venture beyond the tourist attractions. Additionally, you can always get free souvenirs that don’t cost you a cent.
It has become increasingly common to see people with two phones. Their reasons are that either the second phone is for work or a backup. But is it necessary to have two phones?
Having more than one phone can be a financial burden. The immediate one is that it is a dead capital. That money could earn you interest if you deposited it in a SACCO or MMF. But you invested it in a depreciating asset.
Unless two phones make financial sense to you, you should look for better alternatives. The best one is to buy a dual sim phone and insert your work and personal sim cards. If you keep two phones for security reasons, you can consider buying a feature phone (kabambe). They're cheaper, and you can switch them when going out at night or visiting unsafe areas.
Another way to waste money on phones is to upgrade them yearly. You should consider keeping your phone for a few years if it's functional. People often upgrade their phones for intangible reasons like keeping up with trends and showing off. They end up losing thousands each year.
While you deserve a way to entertain yourself and access services conveniently, you must ensure you do it in moderation. Take the example of Paul, a 33-year-old freelance graphic designer who recently realised he was spending upwards of Ksh7,000 monthly paying for rarely used services. He was subscribed to two streaming services, music, gym, VPN, and cloud storage.
Of all those subscriptions, only two (VPN and storage) were useful, as he needed them to work. He only watches TV three or four times per week despite paying for two streaming services. He has a monthly gym subscription but only uses it whenever he is free, which is less than three days per week.
Paul decided to cut his subscription by almost three-quarters by paying for only what he needed. He would pay for one streaming subscription per month, cancel his monthly gym membership, and only pay for the days he attends. He also cut his premium music subscription and opted for a free version.
Consider taking Paul's approach if you are paying for too many subscriptions. For example, instead of paying for two streaming services monthly, pay for them in alternating months.
Read Also: 10 Financial Mistakes Everybody Should Make
Buying designer clothes is one of the biggest ways people waste money. And they mostly do it for the wrong reasons, often influenced by bad financial habits: to look trendy and to show off. While investing in quality and nice-looking clothes is not wrong, you must do it within your budget and means.
If, for instance, you are earning Ksh80,000 per month, spending an average of Ksh100,000 per year on designer clothes and shoes is overdoing it. They are multiple ways you can look fashionable without breaking the bank. Some strategies you can adopt include:
When it comes to home decorations, it can be tempting to want to fill your house with beautiful and aesthetically pleasing things. However, it is essential to remember only to buy products that serve a specific purpose. Purchasing decor with no purpose can often lead to clutter, disorganisation in your home, and a waste of money.
Home decor with no purpose refers to decorative items with no functional or practical purpose. These items are often purely decorative and are chosen for their aesthetic appeal rather than usefulness. Some examples include; temporary furniture, too many throw pillows, fake plants, fake books, too much lighting equipment, etc.
There's nothing wrong with keeping pets. They can keep you and your family happy, are loyal, and provide good company. But should you be paying so much for them? While there are some rare breeds of pet you can’t get for free, you should consider alternatives or extending your search window.
The most logical way, financially or otherwise, is to adopt a pet instead of buying one. There are countless animals in shelters and rescue organisations that need a home. When you visit such places to get a pet, you will save money and do a selfless act.
Additionally, free pets can often be found through word of mouth or online classified ads. People may be looking to rehome their pets due to a move, life change, or simply not having the time or resources to care for the animal. You should consider these avenues before buying a pet.
People pay for services they can perform themselves for various reasons. But the main one is convenience. It saves time and effort, and you can spend your free time on other things. But that convenience comes with a price that can add up.
If you are 30 years old, living alone, and have a cleaner coming in twice a week for Ksh500 per day, that could total Ksh52,000 a year. You can save money if you create time and do the cleaning yourself. Here are other services you can start performing to cut your expenses:
Buy now, pay later (BNPL) deals offer a great way to buy products you can’t afford outright by allowing you to pay in instalments. They are sold as a payment option, but in reality, they resemble a loan. Depending on the service provider, BNPL deals can come with many hidden fees that can lead to you paying too much for a product.
Some of those fees include; service fees, interests, application fees, late payment fees, etc. But that's not all; BNPL can also increase your debt-to-income ratio and prevent you from taking other loans. Defaulting can also lead to you being listed on CRB.
To avoid wasting money on these services, you should plan your purchases and avoid using debt to finance your consumerism. While it might look OK now, it can hurt your finances in the long term. It can prevent you from saving, achieving your goals, and worse, pulling you into a debt trap.
Read Also: How to Avoid the Trap of Consumer Debt
Attending events can be fun and social, but they can also be expensive, especially if you pay to attend 10s of such events annually. They require purchasing tickets, transportation, and paying for food and drinks. And these costs can significantly add up. Not to mention, this is money you could have saved.
Spending money to attend too many events also has intangible effects that can affect your finances.
For starters, they breed bad financial habits like impulsive spending and keeping up with the Joneses. This can lead to overspending, regrets, and financial stress. Second, social events rarely bring any value. You are better off attending workshops and seminars when you can network and create opportunities. Finally, these events can lead to burnout, affecting your performance levels at work.
Read Also: 5 Daily Habits To Improve Your Finances
As you head into 2023, you should make an effort to be intentional about how you spend your money. This spending involves making thoughtful and deliberate choices about where and how you use your money. Rather than simply making purchases impulsively or without consideration for the long-term impact, you will start planning your purchases.
Intentional spending often involves setting clear financial goals and creating a budget to help guide and track spending habits. It allows you to regularly evaluate and adjust your spending habits to stay on track and achieve desired results. It encourages you to adopt good habits like living within your means, paying yourself first, sticking to a budget, and planning for future goals.