- Whether you're overpaying for cellular data each month or choosing a large cable plan over streaming services, there are several ways you can cut costs and only pay for what you use and need.
- We spoke with several financial planners about common, expensive things that most people can do without.
Showing off lavish items is an undeniable aspect of American culture, but when it comes to making sound investments in expensive items, there are some purchases financial planners say you should likely exclude from your budget.
Before making an expensive purchase, ask yourself if you can find a cheaper product that will bring as much joy, Jeremy Straub, CEO of Coastal Wealth, told Business Insider. He said that while asking for joy from a product may be cheesy, it could help you think of a big purchase differently.
Another question to ask yourself, Straub said, is: "Could I use this money on an experience that would last a lifetime?"
Business Insider spoke with several financial planners over email about common, expensive things that most people can do without. Take a look at the 12 items they say aren't worth the money.
Unlimited data plans
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Unlimited data plans look attractive on the outside, with a lure of saving, but the average person's mobile data usage in the United States is 2.8 GB per month, according to the Organization for Economic Cooperation and Development .
"People should stop paying for data that they don't use," said Rob Webber, savings expert and founder and CEO of MoneySavingPro.
One key thing to remember is that unlimited data doesn't mean unlimited LTE or 4G data, Webber said. Major carriers provide between 22 and 50 GB of high-speed data before reducing speeds.
"This money could be allocated elsewhere in their budget," Webber added.
Gourmet coffee
Reuters/Kim Hong-Ji
The difference between crafted gourmet coffee and coffee you make at home is the price and place of consumption. While many people prefer high-end coffee, it can be a spending trap, especially when you're paying for the coffee to be made in front of you. Going to Starbucks once a day, for example, and spending anywhere from $3 to $5 on a latte could cost you hundreds per month and thousands a year.
"You can make it yourself at home for much less," said Megan Luke, Senior Vice President and Retail Distribution Sales, Service and Operations Director at PNC Bank.
Name brand everything
Ilya S. Savenok/Getty Images
Making an investment in a luxury handbag or designer shoes can be worth the money if it spends more time on the streets than in a closet. However, purchasing an entire wardrobe of name brands clothes is not worth the investment, said Jeremy Straub, CEO of Coastal Wealth.
"Mix and match price points and only invest in a few designer staples you can wear often and with multiple outfits," Straub said.
New smartphones
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Before running to the nearest Apple or Android store, take a step back and consider the necessity of an upgrade before spending a boat load on it.
"Consider this, you could pay $550+ for the iPhone 7 or you could pay $1,000+ for the iPhone X. The only main differences between the two are that the iPhone X can charge wirelessly and unlock your phone with your face. Could you live without those features? Definitely," Webber said. "Could you find a better use for the $450 you saved by getting the iPhone 7? Absolutely! My advice buy a slightly older model for half the price."
Nice watches
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While many hold a shiny, new, brand name watch as a status symbol, it is not a necessity.
"Smart watches have changed the game, so you don't necessarily need a Rolex to show your status' anymore," Straub said. "More and more wealthy people are choosing to wear an iWatch instead of the IWC."
Cable TV plans
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Netflix and save? Most millennials are not purchasing large cable packages like their parents. More and more people are ditching the dish and sticking to streaming because they don't want to pay for hundreds of channels when they only watch a few, Webber said. He added: "My advice would be to opt for a live streaming service like Sling TV or DirecTV now and save 50%."
A dozen roses on Valentine's Day
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On average, a dozen roses will cost about $50, box and all. For the upcoming holiday, show your love through more meaningful gestures, like cooking a meal or spending the day exploring something new, Luke said. "There are less expensive and more fun! ways to show your affection," she added.
Self-charging robot vacuums
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Though self-charging and cleaning vacuums are popular in millennial households, they are extremely costly and tend to leave a spot. Additionally, they have little resale value if you decide you don't want an automated machine wandering your house, said Erach Screwvala, an estate planning attorney. "A traditional vacuum is a more cost-efficient option," he said.
Heavy furniture
AP/Nati Harnik
People tend to spend a good amount of money on large, heavy, and expensive furniture to fit their perfect vision for a home. But for millennials who move frequently or change tastes, it is not the best investment to purchase large pieces of furniture, according to Straub. "You don't want to be stuck with pieces you have to sell for a fraction of your purchase price," he said.
Overpriced steakhouse dinners
Shutterstock / Denis Kornilov
A luxurious date idea or group outing may include an over-the-top steakhouse dinner that you could have easily enjoyed for less money. Luke recommends trying local, lower-priced options that can give you a great experience that won't hurt your wallet. "Or, even better, make it at home," she said.
Loans to family members
Sebastiaan ter Burg/Flickr
Lending money to family members is a slippery slope. "We all too often see that the agreement of pay back to our clients is never as discussed when it comes to loans given to family members," Straub said. "I would try to stay away from these types of personal loans."
"Fine" jewelry
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It's easy to think of jewelry as a good investment, which it can be when you're in possession of natural diamonds, emeralds, and other precious gems. However, Screwvala said your jewelry may not be as inherently valuable as you think.
When looking into purchasing valuable stones, be sure to do your research. Screwvala said jewelers may use lab-grown diamonds which have no inherent or resale value. "As they're neither precious nor rare, they won't receive a meaningful appraisal, which means as soon as you leave the store, the value will start to decrease," he said.
Natural diamonds will retain their value over time due to their rarity, meaning it can be passed down from generation to generation or sold later down the line. "If you are given the option you should go for the real thing every single time," he said.
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