Editor’s note: This article was first published in February 2018. Its advice on waiting six months to buy the new iPhone and its remark on gold and silver prices “at current prices” reflect early 2018. Point 7 is the author’s opinion and not medical advice. Do not stop or change prescribed medication without talking to your doctor.
When we teach financial education, we often say you have to live below your means, but also within your needs. Even so, we often have some small (and not so small) expenses on stupid things which, if we avoided them, could considerably improve our personal finances.
Here are what we consider the 10 most absurd things we can do with our money, which we could also call the 10 worst investments we make.
The 10 most absurd ways to spend money
See also: Stop throwing your money away on these things
1. Tobacco, alcohol and drugs
Spending on any of these products gradually wrecks our finances and, even more seriously, our health. I’d simply invite you to honestly write down on a piece of paper the money you spend on alcohol and/or tobacco every day. Multiply it by 30. Multiply the result by 12 and there’s your annual spending. And then you said you didn’t have the money for a proper holiday 🙂
2. Gambling
Bonoloto, La Primitiva (Spanish lotto games), bingo, slot machines… the Christmas lottery. If we put the money we spend on gambling into a piggy bank, in 5 years it would be as if we’d won the lottery. Gambling is without doubt one of the stupidest ways to throw money away.
3. The car
A car is a necessity, but it only has one function in terms of our needs, which is getting us from point A to point B. So what you spend should depend on what you need. Remember that a car is the asset that loses value faster than any other. The less you spend on a vehicle, the better, as long as the saving doesn’t end up costing us more because we’ve bought a cheap vehicle in poor condition.
4. The wedding
Most couples start their life together in debt because they had a big, lavish wedding. Others save for years to have that wonderful wedding day. The craziest even take out a loan. I know it’s a special day, but the marriage won’t last any longer or shorter because of what was spent on the wedding day. A small wedding can be very romantic too.
5. Jewellery
Jewellery is pieces of metal that are very hard to resell, and we’ll rarely be paid what we paid for them. It’s also very attractive to burglars. Still, if you’re going to buy, make sure it’s gold or silver, because these metals at least have a chance of going up in price and aren’t so hard to sell (at current prices).
6. Brand-new technology
Waiting 6 months to buy the new iPhone, or any other new version or new tech product, can mean a considerable saving. Always having the latest technology is a new and increasingly common form of addiction.
7. Unnecessary medication
Anti-anxiety drugs and sleeping pills are very fashionable, medications whose long-term use is no different from any drug on the market. As Sandro Dutty once recommended, if you can’t sleep, read a book or have sex. But avoid taking this kind of medication at the first opportunity, because you run the risk of ending up needing it for life.
8. Miracle diets
Don’t spend money on any diet where the dietitian or doctor promises you’ll lose weight without needing to exercise, because 1) it’s probably not healthy, and 2) if it isn’t combined with exercise, you’ll almost certainly put the weight back on.
9. Tarot readers and fortune-tellers
If anyone still doubts that nobody can predict the future, they only need to realise that nowadays, with a two-week course, you can sit behind a phone and predict someone’s future. What’s more, the fortune-teller could be your own neighbour, the one who was working in an office a month ago.
10. A pension plan
Although with a pension plan we’re not really spending that money but saving it for our future, the truth is that we lose money in other ways:
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The return on a pension plan always lags behind inflation (which means a loss of purchasing power in the future), and…
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The opportunity cost: tying up money for 20 or 30 years means we can’t use it for other kinds of investment that could be much more profitable. Granted, a pension plan offers tax advantages, but in financial education terms, putting all of our saving power into it alone is considered one of the worst investments.
See also: 11 things you pay too much for and could save a lot of money on
Featured image: Grendelkhan, CC BY-SA 4.0, via Wikimedia Commons.
