No matter how well you manage money, there are probably still areas where you overindulge.
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Fancy cars, designer clothes, and expensive meals can put a significant dent in your wallet if you’re not careful. And for those in the middle class, keeping track of these expenses can help you better manage your finances in the future.
GOBankingRates spoke with Stoy Hall, a certified financial planner (CFP) and CEO of Black Mammoth, to find out what the biggest money wasters for the middle class are from an advisory perspective.
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Unorganized expenses
“You want to know the main reason you’re broke?” Hall asked. “It’s not what you think. It’s not the economy, it’s not your job, it’s your lack of a plan.”
Disorganization is a major cause of bankruptcy. As Hall explained, there can be a lot of moving parts in the finances of the middle class. They have more assets, which means they buy more things and have more opportunities to build wealth.
However, if they don’t understand how all the pieces fit together, they may end up spending too much.
“Stop living in the dark about where your money is coming from and where it’s going,” Hall said. “Without a clear plan, you’re just throwing your money into the wind.”
Clothing
According to Hall, the middle class squanders their money at stores like Target, Amazon and Kohl’s because it gives them some extra spending money.
“You think you need that new sweatshirt from Target? Think again,” Hall said.
“Clothing is a huge item and a huge problem when it comes to budgeting because it’s something where you think, ‘Oh, I need a sweatshirt, I need pants, I need this.’ And you have the money for it.”
Hall warned that without a plan, you’re likely to overspend on clothes. And if you let it, your closet could be filled to the brim with impulse purchases that will drain you dry.
“Wake up and smell the overpriced cotton, people,” Hall added.
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Cars
Cars are the classic status symbol of the middle class. If you’ve worked hard to get where you are, you deserve that shiny new SUV, right? Not if Hall has his way.
“The majority of people in the middle class are not from the middle class. They came from the near-middle class or have earned an income that puts them in the middle class,” he explained. “And that usually means they’re going to buy a nice, new car.”
Hall found that, on average, people overspend about $15,000 when purchasing a car.
“Guys, that’s fifteen grand wasted,” he warned. “And you haven’t even factored in gas and maintenance.”
“Ask yourself: Do you really need this gas-guzzling monster or do you just want to keep up with the neighbors?”
Eat
It turns out that you’re not just overspending on groceries or just overspending on restaurants—you’re overspending on both.
“You stock your fridge like you’re preparing for the apocalypse, and then you’re too lazy to actually prepare the food,” Hall said. “So what do you do? You go out to eat, effectively doubling your food costs.”
He added that there is nothing wrong with that as long as it is included in the budget.
For example, Hall said, “We are a family that likes to go out, so we will spend less on groceries and vice versa.”
He also suggested “treating your grocery budget like one big pot.” He continued, “It doesn’t matter if you go out. It doesn’t matter if you go grocery shopping. You have $900 a month… and then you can balance it out from there.”
Children’s sports
According to Hall, the cost of children’s sports in America is out of control, and the middle class is spending a lot of money on it because they want the best for their children.
“We do the same thing, but overall it’s too much of an expense because there are ways to expose your kids to programs and so on that don’t cost a fortune,” Hall said.
He said these sports clubs and clinics were making fun of them and it was time to put the brakes on.
“Your child doesn’t need to participate in three travel leagues and four summer camps to be successful in life,” he added. “There are more affordable ways to keep your children active and engaged without mortgaging your future.”
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This article originally appeared on GOBankingRates.com: I’m a Financial Advisor: 5 Things the Middle Class Wastes Their Money On
