20 Things That Are a Complete Waste of Your Money

Summary

This video challenges common financial myths and highlights mistakes that often cost people significant money. Key points include questioning the financial wisdom of buying a primary residence as an investment, avoiding high fees from financial advisors, and being cautious about home renovations, credit card rewards, and insurance strategies. The speaker encourages viewers to focus on intentional spending, prioritizing savings, and avoiding overspending on luxuries or status symbols. Ultimately, the video promotes smarter, more mindful financial decisions for a richer, more fulfilling life.

Takeaways

• 😀 Don't treat your primary residence as an investment—it's often a luxury purchase with hidden costs like taxes and maintenance.
• 😀 Renting and investing the difference might yield better financial returns than buying a home, even in expensive cities.
• 😀 Paying a financial advisor a percentage of assets can eat up a significant portion of your returns, potentially costing hundreds of thousands of dollars over time.
• 😀 Learn the basics of investing and use low-cost index funds or target-date funds instead of relying on expensive advisors.
• 😀 Home renovations are often a luxury rather than an investment, and many won't add significant value to your home.
• 😀 Renovate for joy, not ROI—prioritize enjoying your space without the expectation of getting all the money back.
• 😀 Overspending on credit cards for rewards can lead to financial loss if you're carrying debt with high interest rates.
• 😀 Pay off your credit card balance in full every month before optimizing for points, perks, or cashback.
• 😀 Whole life insurance and complex investment strategies often come with high fees and underperforming returns. Stick to term life insurance instead.
• 😀 Buying online courses or signing up for conferences without following through is a waste of money—prioritize taking action on what you’ve already paid for.
• 😀 Status credit cards and loyalty programs can be expensive and wasteful if you're not using the perks. Downgrade or eliminate them if they don't add real value to your life.

Q & A

Why should you reconsider treating your primary residence as an investment?

Your primary residence is often not a good investment because the associated costs (mortgage, interest, property taxes, maintenance, and closing costs) can outweigh any potential increase in value. Renting and investing the money you would spend on buying could yield better returns over time.

What is the hidden cost of paying financial advisors a percentage of assets under management (AUM)?

The hidden cost of paying an AUM fee is that it grows over time. For example, a 1% fee on $100,000 becomes $1,000, but on $500,000, it becomes $5,000. Over a lifetime, these fees could take up about 28% of your returns, leading to a significant loss in potential wealth.

Why are home renovations often not a good investment?

Home renovations are often not a good investment because most renovations don't increase the value of the home enough to cover the costs. They are usually emotional decisions, not financial ones, and are often framed as investments when they are actually luxuries.

How should you approach credit card rewards to avoid financial mistakes?

You should avoid using credit cards for overspending in the pursuit of rewards. The key is to pay off your balance in full each month. If you are in credit card debt, prioritize paying it off before focusing on earning rewards, as the interest can quickly outweigh any benefits from points.

Why should you avoid whole life insurance as an investment strategy?

Whole life insurance is typically a poor investment because it involves high fees, underwhelming returns, and often unnecessary complexity. Instead, you should opt for term life insurance, which is simpler, more affordable, and focused purely on providing protection.

What is the problem with buying online courses that you don’t implement?

Buying online courses without taking action on them is a waste of money. The real value comes from applying what you learn. If you're in debt, focusing on paying it off first should take priority over buying additional courses or programs.

How can status credit cards and loyalty programs impact your finances?

Status credit cards and loyalty programs can be costly if you don’t use their benefits. The annual fees may not be worth it if you don’t take full advantage of the perks like travel credits, lounge access, or concierge services. Regularly audit whether you're using the benefits, and if not, consider downgrading to a no-fee card.

Why is it important to run the numbers before buying a house?

Before buying a house, it's important to evaluate all the costs associated with ownership, such as mortgage, taxes, and maintenance. Only after running the numbers should you decide if buying is the right choice, based on your personal financial goals and not because of social myths about renting being a waste.

How can you avoid paying unnecessary fees to financial advisors?

Instead of paying financial advisors a percentage of your assets, consider learning the basics of investing yourself and using low-cost investment options like index funds. If you do want personalized advice, pay for it by the hour or for specific projects, not a percentage of your wealth.

What’s the recommended approach to spending on renovations?

The recommended approach is to renovate for personal enjoyment, not expecting financial returns. If you decide to renovate, make sure you can afford it, and save for it over time rather than going into debt. Be honest with yourself about why you’re renovating and make sure it's a lifestyle choice, not an investment expectation.