These days, thanks to modern technology, you can have groceries delivered to your doorstep, summon a driver to pick you up at any location and deposit checks without making a trip to the bank.
“Nearly everything is available at the touch of a button, if you’re willing to pay for it,” says Reggie Joe, a financial advisor with investment services firm Northwestern Mutual in Raleigh, North Carolina.
However, all that ease can wreak havoc on your budget. From the extra cost associated with many services to the unexpected toll on your health, here’s how spending money on added convenience can cost you.
[See: 12 Ways to Be a More Mindful Spender.]
You pay more for specific items and expenses. The most obvious downside of convenience is the premium you pay for it. Springing for an Uber ride is more expensive than walking to the subway. Diced veggies in the supermarket cost more per pound than whole produce. And using the out-of-network ATM that’s next door can translate to a steep fee that could easily be avoided by driving a few streets down to your bank’s ATM.
Beyond sneaky and unnecessary fees, there is a less obvious way people pay more for items because of convenience, says Steve Ng, a chartered financial analyst and professor of practice at Clark University in Worcester, Massachusetts. Some people may pay more for insurance because it’s convenient to stick with the same company, he says. The same can be said refinancing mortgages. While there is savings to be had in shopping for a lower interest rate, the status quo is easier.
Then there is the issue of property taxes. “The whole assessment process by cities and towns is not exact,” Ng says. For people willing to endure the inconvenience of appealing an assessment they think is too high, the payoff could be substantial tax savings.
You could overspend on entire budget categories. Since many of the costs associated with added conveniences are minimal, people tend to overlook their effect on the household budget. “An extra delivery fee here and there may not seem like it will impact your financial strategy, but these small costs start to add up and become a habit,” Joe says.
Without careful monitoring, a habit of eating out regularly or using more expensive transportation options can steer money away from more important budget categories, such as saving for an emergency or retirement.
Joe says a cash envelope system can be an effective way to limit overspending. Each week, place money in separate envelopes designated for food, clothing, transportation and similar expenses. When the money is gone from an envelope, no more spending should occur for that category until the cash is replenished.
You might pay for duplicate services. Ryan Heider, a millennial and financial advisor with Cirrus Wealth Management in Cleveland, Ohio, says subscription services often take a bite out of his peers’ budgets. While the services can be useful, people may have multiple subscriptions that fill the same need.
For instance, someone might have subscriptions to Netflix, Hulu and Amazon Prime to stream television and movies. Or they might pay for both Spotify and Pandora for music. While the offerings might vary from company to company, they are essentially duplicate services. Considered individually, the cost might not seem significant — a standard plan on Netflix is $10.99 per month, while Hulu’s monthly pricing starts as low as $7.99 — but combined, they could add up to hundreds of dollars each year.
“A lot of these subscription services start being very convenient and then end up burning your budget,” Heider says. “If you haven’t used one in two weeks, let it go.”
[See: 8 Big Budgeting Blunders — and How to Fix Them.]
You could buy things you don’t want or need. Subscription boxes are another convenience product that can end up eating away at a budget. Offered by companies such as Birchbox, Stitch Fix and Coffee Crate, these monthly boxes of beauty items, clothes or food come automatically in the mail. Pricing varies, though monthly fees from $10 to $50 are typical. Heider says getting a surprise each month can be fun, but they often include items that end up in the trash or sitting on a shelf unused.
It’s representative of the larger problem with any recurring purchase that offers the convenience of automatic payments. People may sign up for an auto club, gym membership or magazine subscription and then be charged indefinitely even if they never use the product or service. “They make an initial purchase on impulse,” Heider says. “Now, it’s very inconvenient to unwind that purchase.”
Usually recurring charges can be stopped with a phone call or email, but consumers may not be paying attention to their statements and forget the monthly charge is being assessed. Others may simply procrastinate on contacting the company, racking up numerous charges in the meantime.
Your health care costs can go up. Not all costs associated with convenience are obvious. One of the most significant ways a person may pay for an easy lifestyle is in higher health care costs.
Getting a ride rather than walking, eating fast food rather than cooking and sitting at home while others go shopping for you all contribute to a sedentary lifestyle. According to a 2015 study by researchers from the Centers for Disease Control and Prevention and Emory University, health care costs are nearly 30 percent greater for an inactive person than an active person.
If a sedentary lifestyle leads to obesity, that may increase a person’s chances of developing an expensive medical condition such as diabetes, heart disease, cancer or mental illness. Overall, the CDC estimates medical care costs associated with obesity were $147 billion in 2008. While insurance companies and government programs like Medicaid and Medicare may cover some of the expense, patients could end up paying deductibles, copayments and higher health insurance premiums.
[See: 15 Little Things That Impact Your Finances.]
Despite the financial cost — both immediate and long term — you don’t have to forgo conveniences entirely. However, before opening your wallet, compare the price with the value provided and make sure the extra money spent won’t waylay any of your financial priorities such as saving for a long-awaited vacation or retirement.
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5 Ways Convenience Is Killing Your Budget originally appeared on usnews.com
