1. Treating small purchases as harmless
Orman’s well-known “latte” example illustrates how minor indulgences can snowball. She once told CNBC viewers they were “peeing $1 million down the drain” by buying premium coffee every day instead of investing that cash. The math is simple: a daily $5 beverage adds up to roughly $1,825 a year. Invested at a 6% annual return for 30 years, that same amount could approach $150,000. Orman argues that re-directing even part of this discretionary spending into low-cost index funds or micro-investment apps can materially boost net worth over time.
2. Ignoring regular insurance checkups
Fall is open-enrollment season for many U.S. workers, making it an ideal moment to review health, life and disability coverage. Orman warns that people often let policies renew automatically without confirming they still match current needs or market rates. Updating deductibles, coverage limits or beneficiaries can prevent costly gaps and ensure premiums remain competitive.
3. Overpaying for auto insurance
Motorists frequently bundle auto and home insurance with the same provider for convenience, yet fail to comparison-shop when premiums rise. Citing Bankrate data, Orman points out that the average U.S. driver now pays more than $2,300 a year for car insurance. Online marketplaces allow consumers to input basic vehicle and driving details and receive multiple quotes within minutes. Orman stresses that investing a small amount of time in rate comparisons can shave hundreds of dollars off annual costs—money that could instead grow in a high-yield savings account.
4. Delaying budget adjustments
While many households recognize the impact of inflation, some postpone concrete changes until a financial setback forces action. Orman advises a proactive approach: audit subscriptions, renegotiate service contracts and postpone large discretionary purchases whenever possible. By lowering fixed expenses, consumers create room to maintain retirement plan contributions and avoid tapping credit cards for essentials.
Strategies to turn savings into growth
Identifying wasteful spending is only the first step. Orman recommends that any newfound savings be funneled directly into growth vehicles such as employer retirement plans, individual retirement accounts or diversified brokerage portfolios. Apps that round up debit transactions and automatically invest spare change can make the process seamless for users who prefer a hands-off approach.
For those unsure where to begin, Orman suggests setting a specific monthly transfer—no matter how small—from checking to an investment account. Automating the transfer removes the temptation to spend and reinforces consistent saving behavior.
Why immediate action matters
According to the Federal Reserve’s latest Survey of Consumer Finances, the median U.S. household has roughly $65,000 in retirement savings—far below what most experts estimate is needed for a comfortable retirement. By eliminating the four habits Orman highlights, households can free up incremental cash that, when invested, helps close that gap. The cost of waiting is steep: delaying meaningful savings by even five years can require substantially higher monthly contributions later to reach the same goal.
Orman’s overarching message is straightforward: combating inflation and preparing for the future requires vigilance over everyday choices. Eliminating small leaks in the budget, shopping around for essential services and channeling the difference into long-term investments can collectively strengthen financial resilience.
For additional tips on stretching every dollar, visit our Financial Planning section.
Image credit: Taylor Hill / Getty Images
