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How-And Why-We Waste Money


Why do we waste so much? For convenience, for emotional therapy, and to meet other's standards, just for a couple of major starters.

hands in wallet

How many pundits have written “The problem is not how much we earn, but how much we spend.” And Lordy, do we wastefully spend in our consumer-driven economy. Everything in our culture, from marketing, to friends and family, to government urges us to spend, spend, spend. The problem that results is almost universal; “I don’t have enough!” Enough to do what? “Everything!”

Why do we waste so much? For convenience, for emotional therapy, and to meet other’s standards, just for a couple of major starters. I am going to go through a litany of some of our wasteful habits, just scratching the surface really, and then offer some simple suggestions to both blunt the tide of loss and help us feel a bit better about our profligate ways.

Shall we start with things we buy that we did not value until we bought them, aka impulse buying? Or how about paying today for things you benefitted from in the past, like paying interest on a carried credit card balance?

The beginning of the new year brings another one to mind; paying dues to a gym you do not visit and/or buying exercise equipment that likewise you do not use. Ongoing payments for unused services could also include padded cable bills, unread subscriptions and high professional society and hospital dues that do not currently yield any benefit.

And don’t forget our collective proclivity to avoid haggling, comparison shopping, coupons or any kind of research when we buy even expensive items. Or our need to buy new instead of used, cars for one expensive example. Or brand-name products instead of generics. My daughter teases me about the “ghetto” house brand products in my bathroom. But at least I add “penny wise” to my too-frequent “pound foolish.”

Here’s a biggie trifecta for wasteful spending: gambling, tobacco, and alcohol. Wow. We all get the huge direct and indirect costs of these, even the troubled souls who are trapped by them.

A more subtle, but immense spending industry is occupied with our collectively making choices for other people. Gifts, in other words. Some economists call this phenomenon a “deadweight” when you factor in the disuse (10% of all gift cards are never used, for instance). It’s Scroogish to mention this linchpin of our culture, but if you stop to think about it calmly for a moment, you will realize we could do our giving more sensibly and yet remain thoughtful.

One of the biggest wastes we indulge in is our common practice of being financially disorganized. Part of that comes from my usual drumbeat, our lack of training. But we must begin with this concept if we are ever going to get off the treadmill and get ahead.

A key, and paradoxical, step in dialing down our national pastime of wasting money is to spend more. More on savings. Spend on your savings account first and then look elsewhere down the line for other necessities. Think of saving as a step in buying something you want, just in the future. It’s usually something big, like retirement, a house, or college for the kids.

If that is not helpful enough, consider investing not in things, but in relationships, personal development and your health. Not only do those things matter more, but you will be happy to see your exchequer increase as a happy byproduct. Win-win, who knew?

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Victor J. Dzau, MD, gives expert advice
Victor J. Dzau, MD, gives expert advice